Court Opinion

ID: 9465825
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:56:48.483669+00
Date Added: 2024-06-11T17:39:23.565085
License: Public Domain

ADAMS, Circuit Judge
concurring.
I concur in the judgment of the Court and join in parts I and III of the majority’s opinion. However, because the discussion by the majority regarding the issue whether intent must be shown in a price-fixing case diverges from my understanding of the present state of the law on this important subject, I have undertaken a separate statement.
Specifically, the majority appears to adhere to the position that intent is not a necessary element in establishing a price-fixing violation under § 1 of the Sherman Act. Rather, the majority asserts that “the Supreme Court’s statement in [United States v. United States Gypsum Co. [438 U.S. 422] 98 S.Ct. 2864 [57 L.Ed.2d 854] (1978)] on intent was born out of a concern for borderline violations and was not meant to modify past precedent on price-fixing conspiracies.”1 In my view, this stance cannot be squared with the explicit conclusion arrived at in Gypsum: “The criminal offenses defined by the Sherman Act should be construed as including intent as an element.”2 This conclusion by the Supreme Court was specifically grounded on its “unwilling[ness] to construe the Sherman Act as mandating a regime of strict liability criminal offenses.” 3
Accordingly, whereas under the majority’s approach a defendant who is prosecuted for participating in a price-fixing conspiracy or in any other combination that constitutes a per se violation of the Act would not be entitled to a jury charge on intent, I regard such an instruction, when requested, to be mandatory after Gypsum. However, in Gillen’s case it appears that the failure of the trial judge — who sat without a jury and operated without the benefit of the Gypsum pronouncement — to make an explicit determination regarding intent did “not affect the substantial rights of” Gillen.4 Therefore, I join the majority in its affirmance of the judgment of the district court.
As I understand the Gypsum opinion, it instructs that whether the criminal offense charged under section 1 of the Sherman Act is a per se violation or whether at the other end of the spectrum it approaches “the gray zone of socially acceptable and economically justifiable business conduct,”5 the government must meet its burden of establishing intent. Gypsum declares that the prosecution may meet this responsibility under one of two standards. If a defendant is charged with engaging in illegal conduct the anticompetitive effects of which did not come to fruition, Gypsum directs that an “elevated standard of intent” must be satisfied before criminal liability may be imposed^ — namely, that the defendant had the specific intent or conscious purpose to produce the anticompetitive consequences.6 *549On the other hand, if anticompetitive effects actually resulted from the defendant’s actions, the government need prove only that the defendant had knowledge of the probable consequences of his acts.7 Moreover, in establishing knowledge, the government, under the guidelines set forth in Gypsum, may not rely on a presumption that a defendant intends the necessary and direct consequences of his acts, although an anti-competitive effect “may well support an inference that the defendant had knowledge of the probability of such a consequence at the time he acted.” 8
In sum, the Supreme Court held in Gypsum “that a defendant’s state of mind or intent is an element of a criminal antitrust offense which must be established by evidence and inferences drawn therefrom and cannot be taken from the trier of fact through reliance on a legal presumption of wrongful intent from proof of an effect on prices.” 9 Contrary to the majority’s reading of Gypsum, these two aspects of the holding appear to have clarified an unsettled area of law and to have overruled prior precedent that had developed in the wake of United States v. Patten, 226 U.S. 525, 33 S.Ct. 141, 57 L.Ed. 333 (1913). The Supreme Court stated in that early case, which reversed the dismissal of a criminal indictment:
And that there is no allegation of a specific intent to restrain such trade or commerce does not make against this conclusion (sic), for, as is shown by prior decisions of this court, the conspirators must be held to have intended the necessary and direct consequences of their acts and cannot be heard to say the contrary. In other words, by purposely engaging in a conspiracy which necessarily and directly produces the result which the statute is designed to prevent, they are, in legal contemplation, chargeable with intending that result.10
Patten had been regarded, first, as negating a requirement of specific intent in criminal antitrust cases.11 Indeed, it had been thought, as the district court’s jury charge in Gypsum attests, that no intent whatsoever need be established in criminal antitrust cases when it is shown that the defendant’s conduct had anticompetitive effects.12 Patten has also been cited for the proposition that it may be conclusively presumed that a defendant intends the necessary and direct consequences of his acts.13 Neither of these interpretations of Patten would appear to survive Gypsum intact. The first — that proof of specific intent is not required— now applies only to cases where anticompet-itive effects have been demonstrated. The second — that a defendant may be conclusively presumed to intend the necessary consequences of his acts — has been discarded altogether.14
Turning to the present case, it appears that there was no need for the prosecution to establish that Gillen had a conscious purpose to achieve anticompetitive results — the level of intent required in cases where anti-competitive effects cannot be shown. Rather, it was sufficient for the government to demonstrate that Gillen knew that the price-fixing conspiracy would produce such effects. This is so because the district court found that Gillen and the other parties named in the indictment knowingly entered into a conspiracy to fix prices, whereby the prices contained in the corporate defendants’ price lists during the years 1966-73 were set by agreement among com*550petitors.15 Such a price-fixing arrangement is a per se violation of the Sherman Act, which means that there necessarily are anticompetitive effects, since the per se characterization is reserved for those combinations “which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable.”16 And, inasmuch as an ongoing price-fixing scheme spanning at least seven years was found to exist rather than an incipient conspiracy that had not yet borne fruit, it cannot be said that the anticompetitive effects “did not [yet] come to pass” so as to necessitate the establishment by the government of the “elevated standard of intent.” 17
The Supreme Court has narrowly circumscribed the situations in which a fact-finder may reasonably conclude that a defendant lacked the requisite knowledge to support criminal liability for violating section 1 of the Sherman Act. Under the Court’s teaching in Gypsum, all that is demanded for purposes of satisfying the knowledge requirement is that the defendant have a rudimentary awareness of economic cause and effect, and therefore “that the defendant had knowledge of the probability of . [the anticompetitive] consequence at the time he acted.” 18 Thus the government need not prove that the defendant knew that the effects of the conduct or the conduct itself were proscribed, since mistake or ignorance of the law is no defense.19 Nor is it generally essential under this lesser intent standard that the prosecution prove that the defendant engaged in the illegal conduct with an improper purpose in mind.20
Where, as here, the conspirators have been found to have met systematically and periodically for at least seven years to fix prices, it is implausible that they did not know that they were tampering with the supply and demand curve of the competitive market. To paraphrase the Supreme Court, “[t]he business behavior which [gave] rise to criminal antitrust charges [here] is conscious behavior normally undertaken only after full consideration of the costs, benefits and risks.”21 Accordingly, I cannot say on the record before us that the omission by the trial judge of a specific finding that the defendants knew that their conduct would produce anticompetitive results affected the substantial rights of Gil-len so as to warrant a reversal, particularly where such a finding was not requested.22
*551Therefore, I concur in the judgment of the Court.

. Supra at 544.

. 98 S.Ct. at 2876 (footnote omitted).

. Id. at 2872-73 (footnote omitted).

. See 28 U.S.C. § 2111 (harmless error rule). Also, inasmuch as no plain error was committed by the district judge, reversal would not appear to be warranted since no request was made at trial for a determination regarding intent. See note 22 and accompanying text infra.

. 98 S.Ct. at 2875.

. Id. at 2877 n.21.

. Id.

. Id. 98 S.Ct. at 2878.

. Id. 98 S.Ct. at 2872.

. 226 U.S. at 543, 33 S.Ct. at 145.

. See, e. g., United States v. Champion Int’l Corp., 557 F.2d 1270, 1274 (9th Cir.), cert. denied, 434 U.S. 938, 98 S.Ct. 428, 54 L.Ed.2d 298 (1977).

. See Gypsum, supra, 98 S.Ct. at 2872.

. See, e. g., United States v. Hilton Hotels Corp., 467 F.2d 1000, 1002 (9th Cir. 1972), cert. denied, 409 U.S. 1125, 93 S.Ct. 938, 35 L.Ed.2d 256 (1973).

. See Handler, Antitrust — 1978, 78 Colum.L. Rev. 1363, 1399 (1978).

. See United States v. Gillen, 458 F.Supp. 887, 890 892 (M.D.Pa., 1978) (memorandum).

. Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958).

. See Gypsum, supra, 98 S.Ct. at 2877 n.21.

. 98 S.Ct. at 2878.

. See The Supreme Court, 1977 Term, 92 Harv.L.Rev. 1, 297-98 (1978).

. See 98 S.Ct. at 2879 n.23.

. Gypsum, supra, 98 S.Ct. at 2878. In this respect, the conduct involved here is to be distinguished from the exchange of price information that marked Gypsum, where it may well be doubted whether the defendants knew that anticompetitive consequences could be expected to flow from their activity. See id. at 2875 & n.16. See also Handler, supra note 14, at 1399-1400.

. See note 4 supra. Gillen’s defense, which was predicated in large measure on the assertion that he had no knowledge of, and never authorized or ratified the price-fixing agreements entered into by Tomaine, his company’s sales representative, addressed the different question whether Gillen knowingly joined the conspiracy. As the Supreme Court explained in Gypsum, “[i]n a conspiracy, two different types of intent are generally required — the basic intent to agree, which is necessary to establish the existence of the conspiracy, and the more traditional intent to effectuate the object of the conspiracy. See LaFave and Scott, Criminal Law 464-465 (1972). Our discussion here focuses only on the second type of intent.” 98 S.Ct. at 2876 n.20. With respect to the first type of intent — whether the defendants in this case intended to agree upon a conspiratorial course of conduct, the district court determined both that a conspiracy was knowingly formed and that Gillen was a knowing participant. The trial judge also held that there was no need for the government to prove specific intent to restrain trade, a holding that properly reflects the law even after Gypsum. 458 F.Supp. at 893-894.