Opinion ID: 681322
Heading Depth: 2
Heading Rank: 4

Heading: hi-shear

Text: 34 Hi-Shear manufactures and sells fasteners to aircraft manufacturers both directly and through parts distributors such as Rice. Rice pled guilty to bribing various Hi-Shear employees in order to obtain Hi-Shear test reports. According to Hi-Shear, the bribed employees also gave Rice excessive free samples and unauthorized price discounts. In support of this claim, Hi-Shear submitted numerous documents indicating that the bribed employees authorized free samples and extra discounts. Based on this evidence and the grand jury testimony of one of the employees, the district court awarded Hi-Shear restitution for the value of the free samples (less the estimated value of the free samples Rice would have normally received) and the value of the unauthorized discounts. 35
36 Rice first argues that awarding Hi-Shear restitution for the free samples and discounts was illegal under Hughey, 495 U.S. 411, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990). According to Rice, it was convicted of bribing Hi-Shear employees for test reports, not bribing them for free samples and discounts. Id. at 413, 110 S.Ct. at 1981. 37 We disagree. Rice specifically admitted and was convicted of bribing the relevant Hi-Shear employees, including Richard Topp, Hi-Shear's sales manager, during the time when these employees allegedly gave Rice excessive price discounts and free samples. Both Rice Aircraft and Bruce Rice signed admissions indicating that the payments to Topp, which totaled over $22,500 between February 1986 and 1987, were made to assist the company [Rice Aircraft]. ER 56, 71. The district court similarly found that the purpose was to gain competitive advantage in the industry. ER 92. Thus, Rice's offense of conviction is bribery, not bribery for test results. If Rice's bribes caused Hi-Shear employees to give Rice unauthorized free samples and excessive discounts, as well as test reports, Hi-Shear may recover restitution for them. 38
39 Rice also contends Hi-Shear did not give it excessive free samples or price discounts. However, Hi-Shear submitted documents showing that between February 1986 and March 1988, bribed Hi-Shear employees gave Rice some 16,164 free samples. During this period Hi-Shear gave all other distributors a total of 165 free samples. In addition, Hi-Shear notes that it had a policy of not giving any one customer more than a few hundred dollars worth of free samples and notes that the Rice received some $111,927 worth of free samples. Finally, Hi-Shear employees testified that Hi-Shear had a policy of not giving free samples to distributors, who, like Rice, compete with Hi-Shear. 40 Hi-Shear submitted inventory forms indicating that the bribed employees gave Rice an additional price discount at the time of invoicing. Affidavits from Hi-Shear employees and documentary evidence suggest that this additional line discount was not standard Hi-Shear policy and was not given to other customers. Correspondence between Hi-Shear employees indicates that, when Hi-Shear became aware of the additional line discount, it attempted to correct the error, giving up only when Bruce Rice threatened to tell airline manufacturers that Hi-Shear was raising prices on existing purchase orders. ER 313. 41 The district court did not clearly err in finding that Rice received excessive price discounts and free samples. 42
43 Rice also argues that Hi-Shear should recover only the manufacturing costs of any illegally gained free samples, and should not recover these samples book price which includes a profit markup. We disagree. Had Rice not obtained the free samples, Hi-Shear would have sold them, for their book-value, either to Rice or to other customers. Thus, the district court did not abuse its discretion in calculating restitution based on the samples' book value. 44
45 Rice also contends the bribes did not proximately cause the Hi-Shear employees to give Rice the free samples and price discounts. However, Hi-Shear showed that Rice bribed certain Hi-Shear employees and that these bribed employees gave Rice excessive free samples and price discounts. Moreover, Hi-Shear's sales manager, Richard Topp, testified before a grand jury that he took bribes from Rice and gave Rice free samples when it sought an inordinate number of samples. Topp also testified that, during the relevant period, he gave Rice price concessions. The district court did not clearly err in finding that Rice's bribes caused Hi-Shear employees to give Rice excessive free samples and price discounts. 46
47 Rice also insists that Hi-Shear waived and ratified the free samples and price discounts. It notes that the bribed employees completed inventory forms and other documents and contends that the existence of these forms proves that Hi-Shear knew of and approved the free samples, and thus waived its right to object to them. The district court's factual finding to the contrary is, again, not clearly erroneous: Hi-Shear argues that Rice bribed high-level employees and contends that no Hi-Shear internal control procedures uncovered the illegitimate samples at the time they were given. The district court did not clearly err in accepting these arguments. 48 Rice also contends that Hi-Shear ratified the price discounts, by later offering Rice a similar discount. However, the record indicates that when Hi-Shear allegedly discovered the extra line discount, it wrote Rice that the backlog of Rice Aircraft is being reviewed at present to determine what discounts have actually been taken and those offered. An adjustment to the prices will be expected where your pricing errors have occurred.... I have placed a stop order on all Rice shipments until our review is complete. ER 311 (dated March 19, 1987). When Rice protested, threatening to go back to Grumman, Lockheed, Sikorsky, Douglas and Northrop and explain that the reason for our non-delivery is that Hi Shear is contemplating raising the prices on existing purchase orders, ER 313, Hi-Shear agreed to offer Rice the previously offered discounts, but specifically noted that it would no longer allow Rice to take an additional line discount at the time of invoicing. ER 314. The district court did not clearly err in finding that Hi-Shear had not ratified the additional line discount. 49
50 Finally, Rice alleges that Hi-Shear improperly recovered for free samples given after the conspiracy allegedly ended on October 30, 1987. However, Hi-Shear's evidence showed that between February 25, 1985, and March 1988, the bribed employees or their assistants authorized every Hi-Shear requisition slip giving Rice Aircraft free samples. The district court did not abuse its discretion in ruling that Hi-Shear continued to suffer losses as a result of Rice's bribes even after the end of the conspiracy.