Opinion ID: 513267
Heading Depth: 2
Heading Rank: 1

Heading: Statute of Limitations: Criminal Antitrust Conspiracy

Text: 6 The defendants first challenge the district court's holding that the indictment was not barred by the five year statute of limitations for criminal conspiracies, 18 U.S.C. Sec. 3282. We affirm. 7 Section 3282 provides that the statute of limitations runs for five years after [the] offense shall have been committed. 4 The indictment was filed on September 16, 1986. The district court concluded that the antitrust conspiracy was not committed (i.e. completed) until Hyman made the last payment to Paxson Electric in January 1985 and therefore that the indictment was filed well within the five year limitation period. The appellants argue that at the latest, the conspiracy was committed on January 14, 1980, the date on which the contract was entered after the bids were submitted in September 1979. They argue that the payoffs from Paxson Electric to Dynalectric (the last of which were in 1983) and the payments from Hyman to Paxson Electric (the last of which was in January 1985) were results--rather than objectives--of the conspiracy. The task before us is to decide whether the conspiracy to restrain trade was committed when the contract was awarded to Paxson Electric following the submission of rigged bids or whether the conspiracy continued either until Paxson Electric received the last payments under the contract or until Paxson Electric made the last disbursement of the illicit profits to Dynalectric pursuant to the alleged joint venture agreement. 8 We agree with the district court. The case law, applied to the particular facts of this case, amply supports the district court's conclusion that the payments from Hyman to Paxson Electric, pursuant to the Snapfinger subcontract, and the payments from Paxson Electric to Dynalectric, pursuant to the alleged joint venture agreement, were elements of a continuing conspiracy to restrain trade rather than merely the results of a completed conspiracy. 9 Our analysis of the relevant cases begins with United States v. Kissel, 218 U.S. 601, 31 S.Ct. 124, 54 L.Ed. 1168 (1910), the seminal Supreme Court case interpreting the criminal statute of limitations in the context of an antitrust conspiracy. Justice Holmes, writing for the Court, concluded that a conspiracy can have continuance in time. 218 U.S. at 610, 31 S.Ct. at 127. Holmes explained that a criminal conspiracy continues in time beyond the initial conspiratorial agreement until the objectives of the conspiracy either are abandoned or succeed. Id. Holmes also explained, however, that once the objects of the conspiracy succeed or are abandoned, the mere continuance of the result of [the] crime does not continue the crime ... for purposes of the statute of limitations. 218 U.S. at 607, 31 S.Ct. at 126. 10 To determine the extent to which a conspiracy continues over time, we must determine the objectives of the conspiracy. In any given case, the limits of a conspiracy to restrain trade depend on what the conspirators agreed to do. As the Supreme Court explained in Grunewald v. United States, 353 U.S. 391, 397, 77 S.Ct. 963, 970, 1 L.Ed.2d 931 (1957), the crucial question in determining whether the statute of limitations has run is the scope of conspiratorial agreement for it is that which determines both the duration of the conspiracy and whether the act relied on as an overt act may properly be regarded as in furtherance of the conspiracy. In short, Kissel and Grunewald teach that a conspiracy continues until the objectives of the conspiracy succeed or are abandoned and that to determine the objectives of any given conspiracy, the court must look to the conspiratorial agreement. 11 The relevant contours of a conspiratorial agreement in any given case are those charged in the indictment. United States v. Northern Improvement Co., 814 F.2d 540, 542 (8th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 141, 98 L.Ed.2d 98 (1987); United States v. Inryco, Inc., 642 F.2d 290, 293-94 (9th Cir.1981), cert. dismissed, 454 U.S. 1167, 102 S.Ct. 1045, 71 L.Ed.2d 324 (1982); United States v. Davis, 533 F.2d 921, 929 (5th Cir.1976) 5 (For purposes of the statute of limitations [18 U.S.C. Sec. 3282] the overt acts alleged in the indictment and proved at trial mark the duration of the conspiracy.); United States v. Helmich, 704 F.2d 547 (11th Cir.), cert. denied, 464 U.S. 939, 104 S.Ct. 353, 78 L.Ed.2d 317 (1983). 6 Paragraph 18(d) of the indictment clearly alleges that two substantial terms of the continuing agreement among the conspirators were that Paxson Electric would earn profits on the rigged Snapfinger contract and that it would disburse fifty percent of those profits to Dynalectric in accordance with a silent joint venture agreement. 7 In addition, Paragraph 17 of the indictment charged that the conspiracy continued through at least January 1985. 8 Thus, it is clear from the indictment that the scope of the conspiratorial agreement specifically encompassed Paxson Electric's receipt of payments under the Snapfinger contract and Dynalectric's receipt of a percentage of these profits in consideration for its participation in the conspiracy, and that the fulfillment of the objectives of the conspiracy continued through January 1985. The indictment, filed in September 1986, therefore was timely. 12 Every circuit that has addressed this issue has concluded that a criminal conspiracy to restrain trade by collusive, anti-competitive bidding continues for the purposes of the five year statute of limitations until either the final payments are received under the illegal contract or the final distribution of illicit profits among the conspirators occurs. See United States v. A-A-A Electrical Company, 788 F.2d 242 (4th Cir.1986); United States v. Northern Improvement Co., 814 F.2d 540 (8th Cir.1987); United States v. Inryco, Inc., 642 F.2d 290 (9th Cir.1981), cert. dismissed, 454 U.S. 1167, 102 S.Ct. 1045, 71 L.Ed.2d 324 (1982); and United States v. Evans & Associates Constr. Co., 839 F.2d 656 (10th Cir.1988). We find the reasoning in these cases persuasive, particularly the analyses of the Fourth Circuit in A-A-A and the Eighth Circuit in Northern Import. 13 In A-A-A, the appellants submitted collusive bids for an electrical construction project. A federal indictment charging appellants with violating Sec. 1 of the Sherman Act was issued more than five years after the bids were submitted and the contract was awarded but less than five years after appellants received the final payments under the contract and made the final distribution of the illicit profits. Similar to the indictment in this case, the indictment in A-A-A charged that the conspiracy by its terms included the rigging of a bid, the securing of an artificial price for the ... project, and payoffs to the coconspirators who helped secure the project. 788 F.2d at 245. 14 The A-A-A appellants argued that the conspiracy was complete when they submitted the bids and that the payments received and the payoffs made did not restrain trade and thus were irrelevant for determining when the statute of limitations began to run. Id. at 244. The Fourth Circuit rejected both of these arguments. The court held that a criminal conspiracy to restrain trade should be treated the same as any other criminal conspiracy for purposes of determining the limitation period. Id. at 245. The court recognized that a Sec. 1 Sherman Act violation can occur without any overt act, and hence that a party could suffer legally cognizable harm before any overt acts took place. However, the court emphasized that as with any criminal conspiracy, the relevant date in the statute of limitations analysis is the date on which the last overt act in furtherance of the conspiracy is made, not the date on which a party suffers legally cognizable harm. Id. Hence, although the payments and payoffs were not necessary elements of a criminal antitrust conspiracy to restrain trade, they constituted overt acts made in furtherance of the conspiracy. 9 15 The court also concluded that securing payments under the contract and making payoffs to fellow conspirators were necessary to the successful consummation of the bid-rigging agreement, id., i.e. were necessary objectives of the agreement, and that therefore under Kissel and Grunewald the statute of limitations did not begin to run until these objectives succeeded or were abandoned. 16 In Northern Improvement, the appellants submitted bids on several municipal improvement projects. Rather than agreeing that one of the appellants would submit the low bid on each of the three contracts and thereafter share the profits with the other conspirators, the appellants arranged the bids so that each conspirator was the low bidder on one project. Consequently, the conspirators did not divide the profits each made on its particular contract. The indictment was filed within five years after the appellants received final payments under the contracts but more than five years after the bids were submitted and the contracts awarded. 17 The district court concluded that the conspiracy terminated when the bids were submitted, in part because there was no sharing of spoils after the payments on the contracts.... 814 F.2d at 541. The Eighth Circuit reversed. After noting the indictment plainly charged that the appellants agreed to rig the bids  'with the expectation that [the agreed upon] low bidder would be awarded the project and paid by the city awarding the project ...,'  the Eighth Circuit reasoned that receipt of payments--in addition to rigging the bids--was a central purpose of the conspiracy to restrain trade. Id. at 542, quoting the indictment. The court also held that the unilateral receipt of payments under the contract was an overt act which furthered the conspiracy, regardless of the fact that there were no payoffs from the illicit profits. Id. at 543 n. 1. 18 We now turn to the specific arguments which appellants raise in this appeal, many of which were addressed and rejected by the four circuits that previously have considered this corner of the law. 19 Appellants primarily rely on City of El Paso v. Darbyshire Steel Co., 575 F.2d 521 (5th Cir.1978), cert. denied, 439 U.S. 1121, 99 S.Ct. 1033, 59 L.Ed.2d 82 (1979). Darbyshire is a civil antitrust case involving a virtually identical bid rigging conspiracy in which the court had to determine when the civil statute of limitations, 15 U.S.C. Sec. 15b, began to run. The civil statute of limitations provides that a civil antitrust action must be brought within four years after the cause of action accrues. 10 The Darbyshire court held that in a bid rigging case, a civil antitrust cause of action accrues when the contract is executed; at that point, the plaintiff's damages are fixed and ascertainable. Id. at 523. 20 The appellants assert that the requirement that damages must be ascertainable before the civil statute of limitations begins to run is a requirement above and beyond the criminal limitations requirement that the conspiracy must be completed. In other words, appellants contend that in a civil antitrust case, the conspiracy must be completed and the plaintiff's cause of action must have accrued before the statute of limitations begins to run. Therefore, they contend that the court's holding in Darbyshire necessarily means that the conspiracy was completed when the contract was executed. Appellants offer no cases supporting their interpretation of Darbyshire, i.e., that a civil antitrust cause of action cannot accrue before the conspiracy is completed. We note that this interpretation directly conflicts with the Fourth Circuit's decision in A-A-A that the criminal antitrust statute of limitations begins to run, not from the date of the legally cognizable harm, but from the date of the last overt act. 788 F.2d at 245; see discussion of A-A-A, supra. 21 We conclude that Darbyshire is not helpful in this case because it does not involve an interpretation of the appropriate statute of limitations. The requirement that a cause of action accrue in a civil antitrust case before the statute of limitations begins to run is separate and distinct from--not cumulative to--the requirement in a criminal antitrust case that the statute of limitations begins to run when the conspiracy is completed. As the Fourth Circuit explained in A-A-A: 22 We reach this conclusion [that a conspiracy to restrain trade encompasses receipt of payments for purposes of the criminal statute of limitations] mindful of the fact that the ... statute of limitations ... for civil antitrust actions begins to run at the time the antitrust cause of action accrues and that the continued receipt of payments may not constitute a continuing violation of the antitrust laws for civil statute of limitations purposes.... The present case, however, is ... [not controlled by the civil statute] but by an entirely different statute governing the limitations period for criminal conspiracies, including those of a continuing nature. 23 788 F.2d at 246 n. 4. 24 Moreover, nothing in Darbyshire addressed the duration of the conspiracy. The Darbyshire court did not hold that the cause of action accrued and the statute of limitations began to run because the conspiracy was complete nor did Darbyshire explicitly or implicitly hold that civil damages could not be ascertained before the conspiracy terminated. Thus, we agree with the government that accrual of a cause of action for civil statute of limitation purposes and completion of the conspiracy for criminal statute of limitations purposes are two entirely different and distinct issues. 25 The appellants also contend that the primary objective of a conspiracy to restrain trade in a Sec. 1 Sherman Act case is the restraint of trade itself and that after the rigged bids are accepted, the restraint of trade ends. They argue that the payments received under the Snapfinger subcontract are results of the conspiracy, rather than objectives of the conspiracy. 26 We disagree. It is inconceivable to us that any business would conspire to restrain trade solely for the sake of restraining trade; the attendant battery of civil and criminal penalties for antitrust violations simply is too threatening to convince us that anybody would attempt to restrain trade without also having the further goal of financial self-enrichment by virtue of the restraint of trade. We believe that a central objective of a conspiracy to restrain trade is to garner illicit profits. We find persuasive the Eighth Circuit's explanation of the objectives of a criminal conspiracy to restrain trade through collusive bidding: 27 We do not deal here with criminal behavior that is an end in itself. Common sense tells us that the conspirators' purpose was to reap the benefit of the conspiracy: to be awarded public improvement contracts at anti-competitively high prices and to be paid for those contracts.... [T]he object and purpose of [the] illegal agreement [to collusively rig bids] was 'illicit gain,' the receipt of payments, and we conclude that the district court erred in holding that the purpose of the conspiracy terminated the moment the bids were submitted. 28 Northern Improvement, 814 F.2d at 542. See United States v. Rodgers, 624 F.2d 1303, 1310 (5th Cir.1980) (a bidrigging scheme would have been meaningless, incomplete, and futile without final award and payment....), cert. denied sub nom., Anthony J. Bertucci Constr. Co. v. United States, 450 U.S. 917, 101 S.Ct. 1360, 67 L.Ed.2d 342 (1981). Therefore, we reject the appellants' argument that receiving payments under the contract or distributing illicit profits among the conspirators cannot as a matter of law be an objective of a conspiracy to restrain trade. The conspiracy continues so long as one or more of the conspirators continues to receive payments under a collusive contract--i.e. as long as they continue to realize a central and obvious objective of the conspiracy. 29 We also disagree with the appellants' contention that the joint conspiratorial action necessary for a conspiracy ended when they submitted the rigged bids. The continued cooperation of Paxson Electric and Dynalectric was evident in two respects long after the bids were submitted in early 1980. Paxson Electric divided the illicit profits with Dynalectric pursuant to the joint venture agreement. The final payment to Dynalectric was made in 1983, well within the five-year limitation period. At least from Dynalectric's perspective, these payments were a crucial element of the jointly conceived and executed conspiratorial plan; these payments would not have occurred if the parties had ceased to cooperate. 30 Continued cooperation tacitly was evidenced by Dynalectric's silence after it had received its final payoffs under the joint venture agreement. Dynalectric's silence was necessary if the conspiracy was to be successfully carried to fruition, i.e., if Paxson Electric was to receive all of its illicit profits via receipt of the subcontract payments from Hyman. 31 The appellants argue that the payments from Paxson Electric to Dynalectric and Dynalectric's silence after it received the final payment under the joint venture agreement constitute efforts to conceal the completed crime. In Grunewald, the Supreme Court held that conspirators' efforts to conceal their actions after they had accomplished the objectives of the conspiracy were not part of the overall conspiracy. 353 U.S. at 402, 77 S.Ct. at 972. The Supreme Court carefully limited its holding to cases involving concealment of the illegal activities after the main objectives of the conspiracy were accomplished. The court pointed out the difference between concealment done in furtherance of the objectives of the conspiracy, such as kidnappers hiding out until they receive the ransom or car thieves repainting a stolen car, and concealment done to cover up the crime itself, such as kidnappers covering their tracks after they had received the ransom. 353 U.S. at ----, 77 S.Ct. at 974. 32 The payments Paxson Electric made to Dynalectric were important objectives of the conspiracy, rather than hush money paid to conceal a completed crime. Thus, our conclusion that these payments continued the conspiracy is not at odds with Grunewald. An analogous case is United States v. Walker, 653 F.2d 1343 (9th Cir.1981), cert. denied, 455 U.S. 908, 102 S.Ct. 1253, 71 L.Ed.2d 446 (1982). In Walker, the defendant defrauded the government by submitting collusive bids and later splitting the illicit profits with the other conspirators, in violation of 18 U.S.C. Sec. 371. The Ninth Circuit concluded: 33 We do not agree with [the defendant] that the acts of contract performance and division of profits are analogous to coverup activities and thus barred by Grunewald. However, even if we were to accept this tortured analogy and apply the Grunewald test, those acts formed part of the conspiracy because they did not follow the accomplishment of its central criminal objectives but rather were acts in furtherance of those aims, viz, obtaining and dividing the excess profits made on the timber. [Defendant's] definition of the objective of the conspirators as limited to obtaining the award from the Forest Service is far too narrow. 34 Id. at 1348 (emphasis in original). The Walker court also noted that [w]ithout the continuing cooperation of his co-conspirators, bought by the payoffs to them in various forms, the scheme would have fallen apart. Id. at 1347. 35 We also believe that Dynalectric's cooperative silence from 1983, when it received its final payment under the joint venture agreement, to 1985, when Paxson Electric received its final payment from Hyman, is akin to the kidnapper awaiting the ransom or the car thief repainting the car. In other words, Dynalectric's continued tacit cooperation was necessary to the successful accomplishment of the crime. Grunewald, 353 U.S. at 405, 77 S.Ct. at 974; A-A-A, 788 F.2d at 245. 36 As a final matter, we note that if we were to adopt the appellants' argument that the conspiracy concludes when the contract is awarded following the rigged bidding, we would effectively eliminate the difference that the Sherman Act explicitly makes between contracts and conspiracies in restraint of trade. We conclude that a conspiracy to restrain encompasses more than a contract in restraint of trade. The distinction between a contract in restraint of trade and a conspiracy in restraint of trade was explicitly noted by the Supreme Court in Kissel where Justice Holmes wrote that [a] conspiracy in restraint of trade is different from and more than a contract in restraint of trade. 218 U.S. at 608, 31 S.Ct. at 126. Therefore, we reject the appellants' interpretation of the Sherman Act that makes its provisions redundant.