| Download the WordPerfect version UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION UNITED STATES OF AMERICA ) ) v. ) Criminal No: H-92-152 ) JOHN J. JOHNSON, ) ) (filed 2/17/94) Defendant. ) ) ) UNITED STATES' PRE-TRIAL MEMORANDUM OF LAW Respectfully submitted, "/s/" JANE E. PHILLIPS "/s/" JOAN E. MARSHALL "/s/" MARK R. ROSMAN Attorneys Antitrust Division U.S. Department of Justice Earle Cabell Federal Bldg. 1100 Commerce Street, Room 8C6 Dallas, Texas 75242-0898 Tel: (214) 767-8051
Page I TABLE OF CONTENTS PAGE INTRODUCTION...............................................1 I STATEMENT OF THE CASE ....................................1 II LEGAL ISSUES RELATING TO THIS SHERMAN ACT CONSPIRACY............................................5 A. Bid Rigging is a Per Se Violation of the Sherman Act..........................................5 B. The Agreement to Rig Bids is the Offense.............6 C. Proof that the Defendant Knowingly Joined a Conspiracy to Rig Bids Provides Proof of the Requisite Intent ....................................6 D. The Defendant's Activities Were Within The Flow of, or Substantially Affected, Interstate Commerce..................................8 E. Impermissible Defenses to a Violation of the Sherman Act..........................................10 III LEGAL ISSUES RELATING TO THE FALSE STATEMENT COUNT ..........................................11 IV LEGAL ISSUES RELATING TO THIS MAIL FRAUD CONSPIRACY..........................................13 V PROOF OF THE EXISTENCE OF A CONSPIRACY....................16 VI EVIDENTIARY ISSUES........................................18 A. Testimony of the Witnesses ..........................18 1. Evidence of the Conspiracy......................18 2. Admissibility of Acts and Declarations of Co-Conspirators..............................18 3. A Witness May Testify to his State of Mind Concerning Any Conspiratorial Agreements ....................................19 4. A Co-Conspirator May Testify As to the Common Meaning of Terms Used by Co-Conspirators and His Understanding of Their Statements ............................20
Page ii TABLE OF CONTENTS - CON'T PAGE 5. Verbal Acts ....................................21 6. It Is Permissible For A Witness to State The Substance Of A Conversation Even Though He May Not Recall Specific Details ....................23 7. Use of Grand Jury Statements As Substantive Evidence At Trial ..................25 8. Use Of Leading Questions To Hostile Witnesses ..............................26 9. Impeachment by Contradiction Is Not Permitted On Collateral Matters ........................................27 B. Introduction Of Documentary Evidence ............................................29 1. Conspirators' Records Of Bid Rigging Are Admissible As Business Records Under Fed. R. Evid. 803(6)............................29 2. Conspirators' Records Of Bid Rigging Are Also Admissible As Co-Conspirator Statements Under Fed. R. Evid. 801(d)(2)(E)................31 3. Business Records Prepared By One Company and Received and Kept By Another Are Admissible Under Fed. R. Evid. 803(6)............................31 4. A Summary Chart Reflecting The Contents Of Voluminous Business Records Is Admissible Under Fed. R. Evid. 1006 Where Examination Of Those Records Individually Is Inconvenient.....................................33 CONCLUSION............................................37 .
Page iii TABLE OF AUTHORITIES CASES PAGE American Tobacco Co. v. United States, 328 U.S. 781 (1946).............................................16 Batsell v. United States, 217 F.2d 257 (8th Cir. 1954) . ................................21 Bourjaily v. United States, 483 U.S. 171 (1987) ............................................18,19 Business Electronics v. Sharp Electronics, 485 U.S. 717 (1988) . . .......................................5 Chumbler v. Alabama Power Co., 362 F.2d 161 (5th Cir. 1966) ..................................27 Ellis v. City of Chicago, 667 F.2d 606 (7th Cir. 1981)....................................27 Ford Motor Co. v. Auto Supply Co., Inc., 661 F.2d 1171 (8th Cir. 1981) ..................................34 Gulf South Machine, Inc. v. Kearney and Trecker Corp., 756 F.2d 377 (5th Cir.), cert. denied, 474 U.S. 902 (1985) ............30 Haney v. Mizell Memorial Hospital, 744 F.2d 1467 (11th Cir. 1984) .................................26,27 Head v. Halliburton Oilwell Cementing Co., 370 F.2d 545 (5th Cir. 1966)....................................27 Hood v. Tenneco Texas Life Ins. Co., 739 F.2d 1012 (5th Cir. 1984) . . . ..........................6 McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232 (1980).............................................9 McNally v. United States, 483 U.S. 350 (1987) ............................................14 Melton v. O. F. Shearer & Sons, Inc., 436 F.2d 22 (6th Cir. 1970) ....................................27 Mississippi River Grain Elevator, Inc. v. Bartlett & Co., Grain, 659 F.2d 1314 (5th Cir. 1981) ................................................32 TABLE OF AUTHORITIES
Page iv CASES - CONTINUEDPAGE Nash v. United States, 229 U.S. 373 (1913) . ..........................................6 Overton v. United States, 403 F.2d 444 (5th Cir. 1968) . . ...............................23 Perkins v. Volkswagen of America, Inc., 596 F.2d 681 (5th Cir. 1979) ..................................27 Pittsburgh Plate Glass Co. v. United States, 260 F.2d 397 (4th Cir. 1958), aff'd, 360 U.S. 395 (1959) ............................................17 Tripp v. United States, 381 F.2d 320 (9th Cir. 1967) . . . ...........................24 Ward v. United States, 296 F.2d 898 (5th Cir. 1961) ..................................22 White Industries v. Cessna Aircraft Co., 611 F. Supp. 1049 (W.D. MO. 1985) ..............................35 United States v. Alfred, 867 F.2d 856 (5th Cir. 1989)....................................14 United States v. All Star Industries, 962 F.2d 465 (5th Cir.), cert. denied, 113 S. Ct 377 (1992) ...........................................5,6,7,8,10 United States v. Allen, 354 F.2d 398 (10th Cir.), cert. denied, 434 U.S. 836 (1977)....................14 United States v. Alvarez, 625 F.2d 1196 (5th Cir. 1980) (en banc), cert. denied, 101 S.Ct. 2017 (1981) ..................................17 United States v. Ascarrunz 838 F.2d 759 (5th Cir. 1988) ...................................8 United States v. Aubrey, 878 F.2d 825 (5th Cir.), cert. denied, 110 S.Ct. 289 (1989) . . ......................................15 United States v. Beebe, 792 F.2d 1363 (5th Cir. 1986) ..................................13
Page v TABLE OF AUTHORITIES CASES - CONTINUED PAGE United States v. Bi-Co Pavers, Inc., 741 F.2d 730 (5th Cir. 1984)....................................8 United States v. Bigham, 812 F.2d 943 (5th Cir. 1987)....................................25 United States v. Blankenship, 746 F.2d 233 (5th Cir. 1984)....................................24 United States v. Booty, 621 F.2d 1291 (5th Cir.), modified & reh'g denied, 627 F.2d 762 (5th Cir. 1980) .................25 United States v. Boyd, 566 F.2d 929 (5th Cir. 1978)....................................21 United States v. Bryant, 770 F.2d 1283 (5th Cir. 1985) ..................................12 United States v. Burke, 495 F.2d 1226 (5th Cir.), cert. denied, 419 U.S. 1079 (1974)............................................21,22 United States v. Cadillac Overall Supply Co., 568 F.2d 1078 (5th Cir.), cert. denied, 473 U.S. 903 (1978).............................................7,9 United States v. Cargo Service Stations, 657 F.2d 676 (5th Cir. 1981), cert. denied, 455 U.S. 1017 (1982) ...........................................7,8,9 United States v. Caucci, 635 F.2d 441 (5th Cir.), cert. denied, 454 U.S. 831 (1981) ..........................................13 United States v. Cohen, 631 F.2d 1223 (5th Cir. 1980) ..................................28 United States v. Consolidated Packaging Corp., 575 F.2d 117 (7th Cir. 1978) ...................................7 United States v. Coyler, 571 F.2d 941 (5th Cir. 1978)....................................32 United States v. Cruz, 805 F.2d 1464 (11th Cir. 1986), cert. denied, 481 U.S. 1006 (1987)..............................23
Page vi TABLE OF AUTHORITIES CASES - CONTINUED PAGE United States v. Daniels, 572 F.2d 535 (5th Cir. 1978)....................................21 United States v. Dennis, 625 F.2d 782 (8th Cir. 1980)....................................25 United States v. Diez, 515 F.2d 892 (5th Cir. 1975)....................................36 United States v. Distler, 671 F.2d 954 (6th Cir.), cert. denied, 454 U.S. 827 (1981) ............................................26 United States v. Duncan, 919 F.2d 981 (5th Cir. 1990), cert. denied, 111 S.Ct. 2036 (1991) ..........................................14,15,16,34,36 United States v. Dynalectric Co., 859 F.2d 1559 (11th Cir. 1988) ................................14 United States v. Elam, 678 F.2d 1234 (5th Cir. 1982) ..................................16,17 United States v. Evans, 572 F.2d 455 (5th Cir.), cert. denied, 439 U.S. 870 (1978) ............................................31,35,36 United States v. Flom, 558 F.2d 1179 (5th Cir. 1977) ..................................5,32 United States v. Freeman, 619 F.2d 1112 (5th Cir.), cert. denied, 450 U.S. 910 (1980) ............................................21 United States v. Gillen, 599 F.2d 541 (3d Cir. 1979), cert. denied, 100 S.Ct. 137 (1979)............................................10 United States v. Goodman, 605 F.2d 870 (5th Cir. 1979)....................................19 United States v. Green, 964 F.2d 365 (5th Cir. 1992) . . . ...........................15 United States v. Gremillion, 464 F.2d 901 (5th Cir.), cert. denied, 409 U.S. 1085 (1972) . . ......................................30
Page vii TABLE OF AUTHORITIES CASES - CONTINUED PAGE United States v. Guzman, 781 F.2d 428 (5th Cir. 1986). . ................................11,12 United States v. Hatch, 926 F.2d 387 (5th Cir. 1991) . . . ...........................14 United States v. Hawkins, 661 F.2d 436 (5th Cir. 1981), cert. denied, 456 U.S. 991 (1982) ..............................27 United States v. Holley, 826 F.2d 331 (5th Cir. 1987)....................................12 United States v. Hyde, 448 F.2d 815 (5th Cir. 1971), cert. denied, 404 U.S. 1058 (1972)..............................29,30 United States v. Keane, 522 F.2d 534 (7th Cir. 1975), cert. denied, 424 U.S. 976 (1976) ..............................23 United States v. Krulewitch, 167 F.2d 943 (2d Cir. 1948), rev'd on other grounds, 336 U.S. 440 (1949) ....................24 United States v. Lambert, 501 F.2d 943 (5th Cir. 1974)(en banc) ..........................12 United States v. Lemire, 720 F.2d 1327 (D.C. Cir. 1983), cert. denied, 467 U.S. 1226 (1984) ............................37 United States v. Lichenstein, 610 F.2d 1272 (5th Cir.), cert. denied, 447 U.S. 907 (1980) ..............................11 United States v. Lueben, 838 F.2d 751 (5th Cir. 1988)....................................12 United States v. MMR Corp., 907 F.2d 489 (5th Cir. 1990), cert. denied, 111 S.Ct. 1388 (1991) ...........................6,10,17 United States v. Massey, 827 F.2d 995 (5th Cir. 1987)....................................13,16
Page viii TABLE OF AUTHORITIES CASES - CONTINUEDPAGE United States v. Mandujano, 499 F.2d 370 (5th Cir. 1974), cert. denied, 419 U.S. 1114 (1975) ..........................................21 United States v. Matlock, 415 U.S. 164 (1974) ...........................................19 United States v. Maze, 414 U.S. 395 (1974) ............................................15 United States v. Mazyak, 650 F.2d 788 (5th Cir. 1981), cert. denied, 455 U.S. 922 (1982) ..............................31 United States v. McClelland, 868 F.2d 704 (5th Cir. 1989) ...................................14 United States v. Metropolitan Enterprises, 728 F.2d 444 (10th Cir. 1984)...................................7 United States v. Miller, 771 F.2d 1219 (9th Cir. 1985) ..................................23 United States v. Mobil Materials, Inc., 871 F.2d 902 (10th Cir.), aff'd on reh'g, 881 F.2d 866 (10th Cir. 1989), cert. denied, 110 S.Ct 837 (1990)...............................8 United States v. New York Great Atlantic & Pacific Tea Co., 137 F.2d 459 (5th Cir.), cert. denied, 320 U.S. 783 (1943) ..............................20 United States v. Notarantonio, 758 F.2d 777 (1st Cir. 1985)....................................12 United States v. Olantunjui, 872 F.2d 1161 (3rd Cir. 1989)...................................14 United States v. Paramount Pictures, Inc. 334 U.S. 131 (1948).............................................8 United States v. Parke, Davis & Co., 362 U.S. 29 (1960)..............................................18 United States v. Perez, 823 F.2d 854 (5th Cir. 1987) ..................................19
Page ix TABLE OF AUTHORITIES CASES - CONTINUED PAGE United States v. Pool, 660 F.2d 547 (5th Cir. 1981)....................................19 United States v. Possick, 849 F.2d 332 (8th Cir. 1988)....................................34 United States v. Postal, 589 F.2d 862 (5th Cir.), cert. denied, 444 U.S. 832 (1979) ..............................31 United States v. Puente, 982 F.2d 156 (5th Cir. 1993)....................................11,12 United States v. Reese, 775 F.2d 1066 (9th Cir. 1985) ..................................17 United States v. Richmond, 700 F.2d 1183 (8th Cir. 1983)............................................11 United States v. Robinson, 774 F.2d 261 (8th Cir. 1985)....................................34 United States v. Rodgers, 466 U.S. 475 (1984) ............................................13 United States v. Rodgers, 624 F.2d 1303 (5th Cir. 1980), cert. denied, 101 S.Ct. 1360 (1981) ............................14 United States v. Sheppard, 688 F.2d 952 (5th Cir. 1982) . . . ...........................30 United States v. Smith, 550 F.2d 277 (5th Cir.), cert. denied, 434 U.S. 841 (1977) ............................................21 United States v. Smyth, 556 F.2d 1179 (5th Cir.), cert. denied, 98 S.Ct. 190 (1977) ..............................34 United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940).............................................6,17 United States v. Stephens, 779 F.2d 232 (5th Cir. 1985)....................................36
Page x TABLE OF AUTHORITIES CASES - CONTINUED PAGE United States v. Tafoya, 757 F.2d 1522 (5th Cir.), cert. denied, 474 U.S. 921 (1985) . . ........................30,31 United States v. Thompson, 811 F.2d 841 (5th Cir. 1987)....................................30 United States v. Trenton Potteries Co., 273 U.S. 392 (1927) ............................................17,21 United States v. United States Gypsum Co., 438 U.S. 432 (1978).............................................7,10 United States v. Veytia-Bravo, 603 F.2d 1187 (5th Cir. 1979), cert. denied, 444 U.S. 1024 (1980)........................32 United States v. Wheeler, 902 F.2d 778 (5th Cir. 1986)....................................14 United States v. Winn, 948 F.2d 145 (5th Cir. 1991), cert. denied, 112 S.Ct. 1599 (1992) ..........................................36 United States v. White, 765 F.2d 1469 (11th Cir. 1985)..................................12 United States v. Williamson, 424 F.2d 353 (5th Cir. 1970)....................................27 United States v. Young Bros., Inc., 728 F.2d 682 (5th Cir. 1984), cert. denied, 469 U.S. 881 .....................................5,7,9,15 STATUTES, RULES AND REGULATIONS 15 U.S.C. ｧ 1.....................................................5 18 U.S.C. ｧ 1001..................................................11 18 U.S.C. ｧ 371 ..................................................13 18 U.S.C. ｧ 1341..................................................14
Page xi TABLE OF AUTHORITIES STATUTES, RULES AND REGULATIONS - CONTINUED PAGE Fed. R. Civ. P. 43(b) ............................................22 Fed. R. Crim. P. 17 ..............................................35 Fed. R. Evid. 602 ................................................20 Fed. R. Evid. 608(b)..............................................27 Fed. R. Evid. 611(c)..............................................26,27 Fed. R. Evid. 701 ................................................20 Fed. R. Evid. 704 ................................................20 Fed. R. Evid. 801(c)..............................................22 Fed. R. Evid. 801(d)(1)(A)........................................25 Fed. R. Evid. 801(d)(2)(E)........................................18,19,31 Fed. R. Evid. 803(6)..............................................29,31,32 Fed. R. Evid. 1006................................................33 MISCELLANEOUS Advisory Committee's Note to Rule 701.............................21 Advisory Committee's Note to subdivision (c) of Rule 801..........22 Advisory Committee's Note to Rule 803(6)..........................32 TREATISES 3 J. WEINSTEIN AND M. BERGER, WEINSTEIN'S EVIDENCE............................................21,26,27,28,34 6 WIGMORE, EVIDENCE ｧ 1770........................................29 C. McCORMICK'S HANDBOOK OF THE LAW OF EVIDENCE....................23,24,28,29 .
Page 1.. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION UNITED STATES OF AMERICA ) ) v. ) Criminal No: H-92-152 ) JOHN J. JOHNSON, ) ) Defendant. ) ) ) UNITED STATES' PRE-TRIAL MEMORANDUM OF LAW INTRODUCTION The defendant in this case is charged with (1) conspiring to rig bids for the award and performance of contracts to supply wholesale grocery products to public schools and other public entities located in southeastern Texas, in violation of Section 1 of the Sherman Act, 15 U.S.C. ｧ 1; (2) making a false statement, in violation of 18 U.S.C. ｧ 1001; and (3) conspiring to commit mail fraud, in violation of 18 U.S.C. ｧ 371. This Pretrial Memorandum sets forth the factual background of the crimes charged, various substantive legal issues relating to these charges, and the relevant law applicable to a variety of evidentiary issues that may arise during trial. .
Page 2 I STATEMENT OF THE CASE The majority of school districts and many other institutions in the Houston area periodically solicit competitive bids for contracts to supply grocery products to the institution for a given period of time. The duration of a contract can vary from a few months to an entire year. However, most of the school districts solicit bids twice yearly, the first bid covering fall semester and the second covering spring semester. These bids request prices on a variety of foods and food service products, including frozen meats and vegetables, dry and canned goods, and juices. Generally, the school districts structure their bids in one of two ways, either as a "line item" bid or a "fee" bid. Under a line item bid, the wholesale grocery company submits a unit price for each food or food-related item which the school district anticipates purchasing during the upcoming contract period. On a fee bid, the wholesale grocery company discloses its unit cost for each item required by the school district and submits a fee schedule showing the handling and delivery charge which the grocery company will add to its unit cost. A fee bid is awarded on an all-or-nothing basis, while line item bids are awarded either on an all-or-nothing basis or separately to the low bidder on each line item. Payments for these contracts are routinely sent by the school districts through the U.S. mail to the wholesale grocery
Page 3 company that is awarded a part of or the entire bid. A substantial portion of the funding used by the public school districts to purchase wholesale groceries for their breakfast and lunch programs is provided by the Food and Nutrition Service, United States Department of Agriculture, through its Child Nutrition programs. During the period charged in the indictment, defendant John J. Johnson was the vice president and bid manager for Glazier Foods Company ("Glazier Foods"). Glazier Foods sold and distributed wholesale grocery products in the Houston area, competing primarily with Sysco Food Services, Inc. of Houston and the Houston Division of White Swan, Inc. The defendant's duties at Glazier Foods during the period charged included the preparation and submission of bids on behalf of his employer for the award and performance of contracts to supply wholesale groceries to school districts and other public entities. The Indictment charges that the defendant discussed among his competitors the submission of bids on upcoming contracts to supply wholesale grocery products to certain public school districts and other public entities in southeastern Texas; designated which corporate co-conspirator would be the lowest responsive bidder for all or part of contracts to supply wholesale grocery products to certain public school districts and other public entities; discussed and agreed upon prices to be submitted on bids to these customers; and refrained from bidding or submitted intentionally high, complementary bids for all or
Page 4 part of contracts to supply wholesale grocery products to certain public school districts and entities. The defendant rigged and discussed bids in at least twenty-five (25) school districts and other public entities with his co-conspirators over a period of five years. This was a classic case of bid-rigging activity. One of the bids the defendant rigged with a competitor is the subject of the False Statement count of the Indictment. In August 1989, the defendant knowingly and willfully made false and fraudulent statements and entries as to material facts, in matters within the jurisdiction of the Veterans Administration, an agency of the United States of America. These false statements were contained in the Certificate of Independent Price Determination which was incorporated into, and formed part of, Glazier Foods' bid on Contract No. V580P-4645, a frozen juice contract, awarded by the Veterans Administration Medical Center #580 in Houston, Texas, on or about September 1, 1989. This bid was submitted and caused to be submitted by the defendant on behalf of Glazier Foods. Finally, the indictment alleges that the defendant knowingly and willfully conspired with his competitors to use the United States mails in furtherance and execution of a scheme and artifice to defraud public school districts in southeastern Texas of money. The Indictment charges that it was a part and object of the conspiracy that the defendant and others would submit collusive, rigged, and fraudulent bids to school districts for the award and performance of contracts to supply grocery products
Page 5....... for a specified period of time and cause to be placed in a United States post office or an authorized depository for mail, among other things, periodic billing statements from and payments to the corporate co-conspirators for wholesale grocery products they supplied for contracts awarded to them on the basis of their collusive, rigged, and fraudulent bids. II LEGAL ISSUES RELATING TO THIS SHERMAN ACT CONSPIRACY A. Bid Rigging is a Per Se Violation of the Sherman Act Section 1 of the Sherman Act, 15 U.S.C. ｧ 1, declares every contract, combination, and conspiracy in restraint of trade to be illegal. "Despite the scope of its literal meaning, the Supreme Court has always recognized that Section 1 was `intended to prohibit only unreasonable restraints of trade.'" United States v. All Star Industries, 962 F.2d 465, 468-69 (5th Cir.), cert. denied, 113 S.Ct. 377 (1992) (emphasis in original) [quoting Business Electronics v. Sharp Electronics, 485 U.S. 717, 724, 108 S.Ct. 1515, 1519 (1988)]. Big rigging is a per se violation of the Sherman Act because it is among the practices conclusively presumed to unreasonably restrain trade. All Star Industries, 962 F.2d at 469 n.8, citing United States v. Flom, 558 F.2d 1179, 1183 (5th Cir. 1977). See also United States v. Young Bros., Inc., 728 F.2d 682, 687 (5th Cir. 1984), cert. denied, 105 S.Ct. 246 (1984) (conspiracies between firms to
Page 6....... submit collusive, noncompetitive, rigged bids are per se violations of the Sherman Act). When a per se violation has occurred, the government is not required to show any anticompetitive effects because they are presumed to exist. All Star Industries, 962 F.2d at 475 n.21; Hood v. Tenneco Texas Life Ins. Co., 739 F.2d 1012, 1017 n.11 (5th Cir. 1984). B. The Agreement to Rig Bids Constitutes the Offense The agreement to rig bids for the award and performance of contracts to supply wholesale groceries to public school districts and other public entities constitutes the complete Sherman Act offense. United States v. Socony- Vacuum Oil Co., 310 U.S. 150, 218-223, 60 S.Ct. 811, 842-44 (1940) (basis of Sherman Act violation is the agreement itself). The government need not allege or prove overt acts in furtherance of a conspiracy to rig bids because the Sherman Act punishes the mere act of conspiring. Nash v. United States, 229 U.S. 373, 378, 33 S.Ct. 780, 782 (1913). See also Socony-Vacuum, 60 S.Ct. 811, 845 n.59. The government is not required to prove a formal, express agreement with all the terms precisely set out and clearly understood by the conspirators. United States v. MMR Corp., 907 F.2d 489, 495 (5th Cir. 1990), cert. denied, 111 S.Ct. 1388 (1991). It is enough that the government show that the defendant accepted an invitation to join in a conspiracy that unlawfully restrained trade. Id. C. Proof that the Defendant Knowingly Joined a Conspiracy to Rig Bids Provides Proof of the Requisite Intent
Page 7....... When the charged offense arises from conduct which is per se illegal, proof of the requisite intent is unavoidably "built into" proof of the conspiratorial agreement itself. See United States v. United States Gypsum Co., 438 U.S. 422, 445-446, 98 S.Ct. 2864, 2877-78 (1978). "[A] finding that [defendants] intended to fix prices supplies the criminal intent necessary for a conviction of a criminal antitrust offense." United States v. Cargo Service Stations, 657 F.2d 676, 683-4,(5th Cir. 1981), cert. denied, 455 U.S. 1017 (1982). The government is not required to prove that the defendant knew his actions were illegal or that he specifically intended to restrain trade or to violate the law. All Star Industries, 962 F.2d at 474 n.18. Proof of the requisite intent in this case will be provided by proof that the defendant knowingly joined a conspiracy to rig bids. Young Bros., Inc., 728 F.2d at 687. Knowledge need not be proved by direct evidence, United States v. Metropolitan Enterprises, 728 F.2d 444, 450-51 (10th Cir. 1984); Young Bros., Inc., 728 F.2d at 687 n.6; and "a single act may be sufficient to draw a defendant within the ambit of a conspiracy where the act is such that one may infer from it an intent to participate in the unlawful enterprise." United States v. Consolidated Packaging Corp., 575 F.2d 117, 126 (7th Cir. 1978). In fact, once the conspiracy has been established, only slight evidence is needed to connect additional participants to it. United States v. Cadillac Overall Supply Co., 568 F.2d 1078, 1087 (5th Cir.), cert. denied, 473 U.S. 903 (1978). Also, any
Page 8....... acts performed in furtherance of the agreement need not be illegal to bind a co-conspirator; they need only be acts for the purpose of forming or effectuating the conspiracy. United States v. Bi-Co Pavers, Inc., 741 F.2d 730, 734 (5th Cir. 1984). Although "mere knowledge" of the existence of the conspiracy may not constitute "membership" in the conspiracy, "acquiescence" may be deemed participation so as to establish a defendant's culpability. See, e.g., United States v. Paramount Pictures, Inc., 334 U.S. 131, 146, 68 S.Ct. 915, 924 (1948); United States v. Ascarrunz, 838 F.2d 759, 763 (5th Cir. 1988) (in some circumstances, association of co-conspirators along with other evidence may be sufficient to establish the existence of a conspiracy). D. The Defendant's Activities Were Within the Flow of, or Substantially Affected, Interstate Commerce Because the challenged activity in this case is per se violative of the Sherman Act, the government is not required to prove an actual adverse impact or harm on interstate commerce. See All Star Industries, 962 F.2d at 475 n.21. Indeed, "[t]he combination and conspiracy is prohibited without regard to the success or failure of the concerted activity." United States v. Mobil Materials, Inc., 871 F.2d 902, 908 (10th Cir.), aff'd on reh'g, 881 F.2d 866 (10th Cir. 1989), cert. denied, 110 S.Ct. 837 (1990). See Cargo Service Stations, Inc., 657 F.2d at 683-84. Nonetheless, because Section 1 of the Sherman Act forbids conspiracies "in restraint of trade or commerce among the several
Page 9.... states," the government is required to prove that the business activities of the defendant and his co-conspirators had some relationship to interstate commerce. The government may prove the nexus between interstate commerce and the defendant's business activities under either of two independent theories: (1) the "in commerce" theory; or (2) the "effect on commerce" theory. See McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 242, 100 S.Ct. 502, 508-09 (1980); Young Bros., Inc., 728 F.2d at 688; Cargo Service Stations, Inc., 657 F.2d at 679; Cadillac Overall Supply Co., 568 F.2d at 1082. The "in commerce" theory requires the government to prove that the business activities in question are an essential, integral part of an interstate transaction and are inseparable from their interstate aspects. McLain, 100 S.Ct. at 510. The "effect on commerce" theory requires the government to prove that the challenged activities have a not insubstantial effect on interstate commerce. Id. at 511. In the instant case, the United States may offer evidence to establish interstate commerce under one or both of the above theories in the following ways: (1) that substantial quantities of wholesale grocery products subject to bid-rigging agreements were shipped to the defendant's corporate co-conspirators in Texas from points of origin outside the state in the flow of interstate commerce, and (2) the federal government, through the National School Lunch Program, partially
Page 10..... reimbursed or subsidized the public school districts in Texas for their purchase of food items for meals to public school students. As part of this program, a substantial amount of federal funds were transferred from outside the State of Texas into Texas. E. Impermissible Defenses to a Violation of the Sherman Act As argued in detail in the Government's Motion in Limine at pp. 4-5, because per se agreements are illegal without regard to whatever economic justification a particular agreement may be thought to have, no inquiry into the reasonableness of a particular per se agreement is permitted. Consequently, evidence of justification or reasonableness is inadmissible if a per se agreement is shown. All Star Industries, 962 F.2d at 475 n.21 (where there is per se illegal agreement, it is no defense that the agreement did not have anti-competitive effects or that defendant's motives were benevolent); MMR Corp., 907 F.2d at 498 (if there was agreement to rig bids, it is no defense that resulting costs and profit of job were reasonable). Likewise, ignorance or mistake of law is not a defense to a charge of purposeful and intentional action such as a Sherman Act conspiracy. See, e.g., Gypsum, 98 S.Ct. at 2878; United States v. Gillen, 599 F.2d 541, 550 (3d Cir. 1979), cert. denied, 100 S.Ct. 137 (1979). Thus, evidence of ignorance or mistake is inadmissible if a per se agreement is shown. Defendant may attempt to assert as a defense that he was forced by his co-conspirators to engage in the bid-rigging conspiracy, and that he had no choice but to succumb to alleged
Page 11...... threats of some sort. Such a defense is impermissible. "Economic coercion" is no legal defense to a Section 1 charge, or to any criminal prosecution. See Govt.'s Second Motion in Limine, pp. 5-7. III LEGAL ISSUES RELATING TO FALSE STATEMENT COUNT The government must establish the following five elements to prove a violation of 18 U.S.C. ｧ 1001: "'(1) a statement, that is (2) false (3) and material (4) made with the requisite specific intent, [and] (5) within the purview of government agency jurisdiction.'" U.S. v. Puente, 982 F.2d 156, 158 (5th Cir. 1993), quoting United States v. Lichenstein, 610 F.2d 1272, 1276 (5th Cir.), cert. denied, 447 U.S. 907 (1980). A false representation is one that is incorrect and untrue and is made with an intent to deceive or mislead. United States v. Guzman, 781 F.2d 428, 431 (5th Cir. 1986). The false statement may be written or oral, sworn or unsworn, voluntary or required by law, signed or unsigned. United States v. Richmond, 700 F.2d 1183, 1187 (8th Cir. 1983). Written statements or representations prosecuted under section 1001 include false certifications, cover letters, answers to simple factual questions, and expense records. United States v. Notarantonio, 758 F.2d 777, 785 (1st Cir. 1985). Materiality of false statements made in violation of 18 U.S.C. ｧ 1001 is a question for the court to decide. Page 12........ States v. Holley, 826 F.2d 331 (5th Cir. 1987); United States v. Bryant, 770 F.2d 1283, 1290 (5th Cir. 1985). The test for materiality, is whether a false statement is capable of affecting or influencing the exercise of a government function. United States v. Lueben, 838 F.2d 751, 754 (5th Cir. 1988). It is immaterial whether the false statements actually affected the government agency, as reliance is not an issue in a 1001 prosecution. Id. The false statement "must simply have the capacity to impair or pervert the functioning of a governmental agency." United States v. White, 765 F.2d 1469 (11th Cir. 1985), citing United States v. Lambert, 501 F.2d 943, 946 (5th Cir. 1974) (en banc). Section 1001 prohibits the knowing and willful making of a false statement. The requirement that the false representation be made "knowingly and willfully" is satisfied if the defendant acts deliberately and with the knowledge that the representation is false. Guzman, 781 F.2d at 431. Reckless indifference has been held sufficient to satisfy the section 1001 scienter requirement so that a defendant who deliberately avoids learning the truth cannot circumvent criminal sanctions. Puente, 982 F.2d at 159. A defendant cannot be relieved of the consequences of a material misrepresentation for lack of knowledge when the means of ascertaining truthfulness are available. Id. Defendant's knowledge of the falsity may be proven through circumstantial evidence. United States v. Beebe, 792 F.2d 1363, 1367-68 (5th Cir. 1986); United States v. Caucci,
Page 13...... 635 F.2d 441, 444-445 (5th Cir.), cert. denied, 454 U.S. 831 (1981). The fifth element requires that the false statement be in a matter within the jurisdiction of any department or agency. For the purposes of section 1001, department and agency are defined in 18 U.S.C ｧ 6. "Agency" includes any department, independent establishment, commission, administration, authority, or board of the United States, or any corporation where the United States has a proprietary interest. Jurisdiction within the meaning of section 1001 should not be narrowly or technically defined. United States v. Rodgers, 466 U.S. 475, 480, (1984). In this case, the Veterans Administration Hospital qualifies as an agency within the meaning of Section 1001. IV LEGAL ISSUES RELATING TO THIS MAIL FRAUD CONSPIRACY In order to prove that the defendant violated 18 U.S.C. ｧ 371, the government must show: "(1) the existence of an agreement by two or more persons to work together for an illegal purpose............................... (2) that the defendant, having knowledge of that agreement, voluntarily joined the conspiracy, United States v. Alfred, 867 F.2d 856, 871 (5th Cir. 1989); and (3) that an overt act was committed in furtherance of the agreement. United States v. Wheeler, 902 F.2d 778, 782 (5th Cir. 1986). Defendant is charged with conspiring to commit mail fraud. The essential elements of mail fraud under 18 U.S.C.
Page 14........... ｧ 1341 are: (1) the existence of a scheme to defraud, and (2) the use of the mails for the purpose of executing the scheme. United States v. Hatch, 926 F.2d 387, 392 (5th Cir. 1990) (citing United States v. McClelland, 868 F.2d 704, 706 (5th Cir. 1989); United States v. Duncan, 919 F.2d 981, 990 (5th Cir. 1990), cert. denied, 111 S.Ct. 2036 (1991). A "scheme to defraud" includes any plan or course of action intended to deceive or cheat another out of money or property. McNally v. United States, 483 U.S. 350, 360, 107 S.Ct. 2875, 2881 (1987). There is no requirement that the scheme to defraud actually must succeed in defrauding its victim of money or property. United States v. Dynalectric Co., 859 F.2d 1559, 1576 (11th Cir. 1988). Bid-rigging schemes are fraudulent in nature and constitute schemes to defraud. United States v. Rodgers, 624 F.2d 1303, 1309-10 (5th Cir. 1980), cert. denied, 101 S.Ct. 1360 (1981). A scheme to defraud under the mail fraud statute may be effected by deceitful statements of half truths or the concealment of material facts. United States v. Olantunjui, 872 F.2d 1161, 1167 (3rd Cir. 1989); United States v. Allen, 354 F.2d 398, 410 (10th Cir.), cert. denied, 434 U.S. 836 (1977). Fraudulent intent may be proven by direct or circumstantial evidence, and it may be inferred from all of the facts and circumstances surrounding a transaction. United States v. Aubrey, 878 F.2d 825, 827 (5th Cir.), cert. denied, 110 S.Ct. 289 (1989). A defendant need not actually be involved in the mailings directly; it is sufficient to show that an individual
Page 15..... does an act with the knowledge that use of the mails will follow in the ordinary course of business. United States v. Green, 964 F.2d 365, 369 (5th Cir. 1992). In the case at bar, the government's evidence of intent will include proof that defendant and others knowingly agreed to rig bids for the award and performance of contracts to supply wholesale grocery products to public school districts. A fraudulent scheme constitutes a federal crime if a defendant "causes" the mails to be used, and the mailings are "sufficiently closely related" to the scheme. See United States v. Maze, 414 U.S. 395, 399, 94 S.Ct. 645, 648 (1974); Young Bros., Inc., 728 F.2d at 689. Although the statute requires that the mailing be for the purpose of executing the scheme, the scheme does not need to contemplate the use of the mails as an essential element. Duncan, 919 F.2d at 990. As long as the mailing is part of the execution of the fraud or incident to an essential part of the scheme, the evidence will sustain a conviction for mail fraud. Id. Communications that are innocent in themselves may still form the basis of a mail fraud conviction. Green, 964 F.2d at 369. Mailings that distribute the proceeds of the scheme to the perpetrators are incident to an essential part of the scheme. Duncan, 919 F.2d at 991. Because the defendant is charged with conspiring to commit mail fraud rather than the substantive offense of mail fraud, the government need not prove an actual mailing. Massey, 827 F.2d at 1001. The government will show that the use of the
Page 16..... mails to further the bid-rigging scheme was "reasonably forseeable." Id. at 1002. Circumstantial evidence is sufficient to prove the existence of a conspiracy to commit mail fraud, and an agreement may be inferred from concert of action among the alleged participants. Hatch, 926 F.2d at 393. V PROOF OF THE EXISTENCE OF A CONSPIRACY Evidence in a conspiracy case need not show that the conspirators entered into any express or formal agreement, or that they directly stated among themselves the object or purpose of the conspiracy, or the means by which the object or purpose was to be accomplished. Rather, what the evidence must show is that a conspiracy was formed and that the conspirators, in some way or manner, came to a mutual understanding to try to accomplish a common and unlawful plan. American Tobacco Co. v. United States, 328 U.S. 781, 809-10, 66 S.Ct. 1125, 1139 (1946). The government need not prove that each participant knew all the other co-conspirators and directly interacted with each other. United States v. Elam, 678 F.2d 1234, 1247 (5th Cir. 1982). Further, it is not necessary for the government to prove that the defendant and co-conspirators knew all the details of the agreement, participated in all of its operations, joined at the same time, or became aware of all the activities of the other participants. United States v. Alvarez, 625 F.2d 1196, 1198 (5th Cir. 1980) (en banc), cert. denied, 101 S.Ct. 2017 (1981).
Page 17....... The evidence in the case need not establish that all the means or methods set forth in the indictment were agreed upon to carry out the alleged conspiracy, Socony-Vacuum, 60 S.Ct. 856; nor that all means or methods which were agreed upon, were actually used or put into operation, United States v. Trenton Potteries Co., 47 S.Ct. at 381; nor that all persons alleged to have been members of the conspiracy were such. See, e.g., United States v. Reese, 775 F.2d 1066, 1071 (9th Cir. 1985). The government need not prove the defendant's precise obligations under the agreement charged in the indictment; it need only prove that the defendant agreed to join the bid-rigging conspiracy. MMR Corp., 907 F.2d at 496. "Likewise, it need not be proved that the conspiracy continued for the duration charged in the indictment." Pittsburgh Plate Glass Co. v. United States, 260 F.2d 397, 401 (4th Cir. 1958), aff'd, 79 S.Ct. 1237 (1959). VI EVIDENTIARY ISSUES A. Testimony of the Witnesses 1. Evidence of the Conspiracy. Although a conspiracy, like any other crime, may be established by direct testimonial or documentary evidence, conspiracies are often secret or camouflaged and thus have to be proved by inferences drawn from relevant and competent circumstantial evidence, including the conduct of the defendant charged. See United States v. Parke, Davis & Co., 362 U.S. 29,
Page 18....... 80 S.Ct. 503 (1960); Duncan, 919 F.2d at 991. 2. Admissibility of Acts and Declarations of Co-Conspirator's. A co-conspirator's statement is admissible under Fed. R. Evid. 801(d)(2(E) if: (1) the declaration was in furtherance of the conspiracy; (2) it was made during the conspiracy; and (3) there is proof of the existence of the conspiracy and of the defendant's connection to it. In determining the existence of these criteria, the court may look to the proffered statements themselves, as well as any other material, whether or not the foundational matter is itself admissible into evidence. Bourjaily v. United States, 483 U.S. 171, 107 S.Ct. 2775 (1987). The foundation need only be established by a preponderance of the evidence. Id. at 2778. In this case, the government plans to offer independent evidence of the conspiracy which will strongly support the conspiracy charge. Nevertheless, according to Bourjaily, the government may offer the statement which it seeks to introduce as at least one part of the proof to establish the co-conspirator exception foundation. The Court remains free, under Bourjaily, to "receive the ["hearsay"] evidence and give it such weight as his judgment and experience counsel." 107 S. Ct. at 2782, quoting United States v. Matlock, 415 U.S. 164, 175 (1974); United States v. Perez, 823 F.2d 854 (5th Cir. 1987). Rule 801(d)(2)(E)'s requirement that a co-conspirator statement be "in furtherance" of the conspiracy is
Page 19....... satisfied if the statement was made to keep a co-conspirator informed of the course of the conspiracy. United States v. Pool, 660 F.2d 547, 562 (5th Cir. 1981). Accord United States v. Goodman, 605 F.2d 870, 878 (5th Cir. 1979)(statements to keep co-conspirator abreast of conspiracy were "in furtherance"). 3. A Witness May Testify to His State of Mind Concerning Any Conspiratorial Agreements. The central issue with respect to each defendant in a Sherman Act case is whether that defendant was party to an agreement to restrain trade. Accordingly, a witness is permitted to testify as to whether an agreement was reached in any particular transaction or conversation. Such testimony is proper since it describes a key fact in the case, and is based upon the witness' own personal observations, knowledge and inferences. Fed. R. Evid. 602, 701. The testimony is not impermissible conclusion, but rather a statement of the witness' state of mind. Fed. R. Evid. 803(3). However, even if characterized improperly as testimony constituting opinion on an ultimate issue (the existence of an agreement), it still would be proper. See Rule 70l (Opinion Testimony by Lay Witnesses) and Rule 704 (Opinion on Ultimate Issue). This issue was addressed by the Fifth Circuit in United States v. New York Great Atlantic & Pacific Tea Co., 137 F.2d 459 (5th Cir.), cert. denied, 320 U.S. 783 (1943), a criminal antitrust case. There, the court commented as follows: Just as a witness may in a civil suit say, not as a conclusion but as a fact, that he made or entered
Page 20..... into an agreement at a certain time and place, so an indictment may charge, and a witness may say, in a criminal case that a defendant made or entered into an agreement at a particular time or in a particular place. Id. at 463. 4. A Co-Conspirator May Testify as to the Common Meaning of Terms Used by Co-Conspirators and His Understanding of Their Statements. In this case, the government will ask witnesses what they understood certain words or phrases used by co-conspirators to mean. The government will also ask each witness whether the co-conspirator also understood the words or phrases to have such a meaning. Fed. R. Evid. 701 specifically makes such lay witness opinion or inference testimony admissible if it is "(a) rationally based on the perception of the witness and (b) helpful to a clear understanding of his testimony or the determination of a fact in issue." Courts have generally admitted lay opinion and inference testimony which meets the criteria of Rule 701. For example, in United States v. Mandujano, 499 F.2d 370 (5th Cir. 1974), cert. denied, 419 U.S. 1114 (1975), the Fifth Circuit approved admission of an FBI agent's testimony that, when the defendant used the term "stuff," the agent understood the defendant to mean narcotics. Id. at 379 (citing Trenton Potteries Co., 273 U.S. at 407, and Batsell v. United States, 217 F.2d 257, 262 (8th Cir. 1954). See United States v. Freeman, 619 F.2d 1112, 1120 (5th Cir.), cert. denied, 450 U.S. 910 (1980); United States v. Daniels, 572 F.2d 535,
Page 21........... 540-41 (5th Cir. 1978); United States v. Smith, 550 F.2d 277, 281 (5th Cir.), cert. denied, 434 U.S. 841 (1977). The lay opinion testimony to be offered in this case will be based on the witnesses' personal observations and will facilitate an understanding of factual issues. Under Rule 701, such testimony should be admitted because it will "put the trier of fact in possession of an accurate reproduction of the event." Notes of Advisory Committee on Fed. R. Evid. 701; 3 J. Weinstein & M. Berger, Weinstein's Evidence ｶ 701[02](1985 & Supp. 1986). 5. Verbal Acts. Out-of-court statements that are verbal acts are admissible and should not be excluded as hearsay. United States v. Boyd, 566 F.2d 929, 936-37 (5th Cir. 1978); United States v. Burke, 495 F.2d 1226, 1232 (5th Cir.), cert. denied, 95 S.Ct. 667 (1974). Fed. R. Evid. 801(c) defines hearsay as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." The Advisory Committee's Note to subdivision (c) of Rule 801 contains the following discussion of verbal acts: The definition [in Rule 801(c)] follows along familiar lines in including only statements offered to prove the truth of the matter asserted. [Citations omitted.] If the significance of an offered
Page 22..... statement lies solely in the fact that it was made, no issue is raised as to the truth of anything asserted, and the statement is not hearsay. [Citation with text omitted.] The effect is to exclude from hearsay the entire category of "verbal acts" and "verbal parts of an act," in which the statement itself affects the legal rights of the parties or is a circumstance bearing on conduct affecting their rights. The Fifth Circuit has applied the verbal acts doctrine in criminal cases. In Ward v. United States, 296 F.2d 898 (5th Cir. 1961), the defendant appealed his conviction for attempting to bribe a juror claiming, inter alia, that the trial court erred in admitting the juror's testimony as to his conversations, not in the presence of the defendant, with an accomplice of the defendant. The juror's testimony about such a conversation in which the bribe offer was made was held to be admissible on two grounds, one of which was the verbal act doctrine since the accomplice-juror conversation was the transaction at issue, i.e., the act or statement was the very fact fixing criminal liability. Id. at 903. See Overton v. United States, 403 F.2d 444, 447 (5th Cir. 1968). When a declarant directs, orders, or instructs another person to perform or refrain from performing an act, such written or oral statement by the defendant is generally not capable of being either true or false. Such a statement is not offered for the truth of the matter asserted, but rather for the fact that it was made by defendant, and if relevant, the statement should be
Page 23...... received as non-hearsay. United States v. Keane, 522 F.2d 534, 558 (7th Cir. 1975), cert. denied, 96 S.Ct. 1481 (1976). These statements are admissible as verbal acts that are probative of the existence of a conspiracy and the effects they might have upon the persons who heard them. United States v. Cruz, 805 F.2d 1464, 1478 (11th Cir. 1986), cert. denied, 107 S.Ct. 1631 (1987); United States v. Miller,771 F.2d 1219, 1233 (9th Cir. 1985) (statements made by co-conspirator warning another to keep his prices higher were non-hearsay). 6. It Is Permissible for a Witness to State the Substance of a Conversation Even Though He May Not Recall Specific Details. Some witnesses in this case will testify about conversations and events which occurred several years ago. In some cases, the witnesses understandably will not be able to recall the details of the conversations and events but will be able to recall their substance. This testimony is admissible, notwithstanding the witnesses' inability to recall the details. While the law is exacting in demanding firsthand observation, it is not so impractical as to insist upon preciseness of attention by the witness in observing, or certainty of recollection in recounting the facts. Accordingly, when a witness uses such expressions as "I think," "My impression is," or "In my opinion," this will be no ground of objection if it appears that he merely speaks from an inattentive observation, or an unsure memory, though it will if the expressions are found to mean that he speaks from conjecture or from hearsay.
Page 24.... C. McCORMICK'S HANDBOOK OF THE LAW OF EVIDENCE ｧ 10, at pp. 21-22 (2d ed. 1972) [Citations and footnotes omitted]. Dean McCormick's summary accurately reflects the case law. See, e.g., United States v. Blankenship, 746 F.2d 233, 241 (5th Cir. 1984) (witness' testimony found credible even though he could not recall details of conversations); Tripp v. United States, 381 F.2d 320, 321 (9th Cir. 1967) (The contention that testimony was vague and uncertain goes to its weight, not its admissibility); United States v. Krulewitch, 167 F.2d 943, 948 (2d Cir. 1948), rev'd on other grounds, 336 U.S. 440, 69 S.Ct. 716 (1949) ("Here the witness, as commonly occurs, was trying in vain to reproduce the identical language used in a conversation he had so long before that his memory was unequal to the task.... He then was permitted to give his understanding of what was said to him--in effect the substance of what was said. The evidence was the best that the circumstances permitted and was properly put before the jury for whatever it was worth."). 7. Use of Grand Jury Statements As Substantive Evidence At Trial. Various witnesses called to testify in this matter will have testified before the grand jury which returned the instant Indictment. It may become necessary during the trial to refer witnesses to portions of their earlier grand jury statements. Should their account at trial vary with the earlier statements under oath, the government may seek the Court's
Page 25..... permission to read portions of those statements into the record. If a witness has testified to facts before a grand jury and forgets or denies them at trial, his grand jury testimony or any fair representation of it falls squarely within Fed. R. Evid. 801(d)(1)(A), and such testimony may be properly admitted and considered as substantive evidence. United States v. Bigham, 812 F.2d 943, 946 (5th Cir. 1987); United States v. Booty, 621 F.2d 1291, 1299 (5th Cir.), modified & reh'g denied, 627 F.2d 762 (5th Cir. 1980). Prior testimony need not be "diametrically opposed" to the witness' current answers in order to be inconsistent within the meaning of Rule 801(d)(1)(A). "Inconsistency . . . may be found in evasive answers, inability to recall, silence, or changes of position." United States v. Dennis, 625 F.2d 782, 795 (8th Cir. 1980). Inconsistency is also found in partial or vague recollection where the prior testimony is more certain and detailed. U.S. v. Distler, 671 F.2d 954, 958 (6th Cir.), cert. denied, 102 S.Ct. 118 (1981). See Bigham, 812 F.2d at 946. 8. Use Of Leading Questions To Hostile Witnesses It has long been permissible in federal courts for a party calling a hostile witness to examine that witness by leading questions, there being no danger of false suggestion when the witness is hostile to the examiner. Fed. R. Evid. 611(c) represents a modification of this practice: LEADING QUESTIONS - Leading questions should not be used on
Page 26..... the direct examination of a witness except as may be necessary to develop his testimony. Ordinarily leading questions should be permitted on cross-examination. When a party calls a hostile witness, an adverse party, or a witness identified with an adverse party, interrogation may be by leading questions. While a witness' hostility ordinarily must be demonstrated to the court, Rule 611(c) provides that certain categories of witnesses can be treated automatically as hostile: adverse parties and witnesses identified with adverse parties. Judge Weinstein's treatise suggests that, under Rule 611(c), an employee of a defendant at the time of events giving rise to the legal action is identified with the defendant. 3 J. WEINSTEIN AND M. BERGER, WEINSTEIN'S EVIDENCE, ｶ 611[05], at 611-81 to 611-82. Accord Haney v. Mizell Memorial Hospital, 744 F.2d 1467, 1478 (11th Cir. 1984); Ellis v. City of Chicago, 667 F.2d 606, 613 (7th Cir. 1981); Perkins v. Volkswagen of America, Inc., 596 F.2d 681, 682 (5th Cir. 1979). Rule 611(c) was intended to enlarge the class of persons who could be regarded automatically as hostile under the now-abrogated Fed. R. Civ. P. 43(b). WEINSTEIN, above. The last sentence of Rule 611(c) goes considerably further than the old Fed. R. Civ. P. 43(b) and, by implication, would include a "party sought to be called [who] could have been sued, either instead of the named defendant or as a co-defendant." WEINSTEIN, at 611-82 to 611-83, citing Chumbler v. Alabama Power Co., 362 F.2d 161,
Page 27............ 163 (5th Cir. 1966) (a Rule 43(b) case). See also Melton v. O. F. Shearer & Sons, Inc., 436 F.2d 22, 27 (6th Cir. 1970). In the instant case, certain government witnesses also could be adversely affected by any testimony they give. Fellow employees of defendant may be considered hostile for the purpose of using leading questions on direct examination. 9. Impeachment by Contradiction Is Not Permitted On Collateral Matters. The Fifth Circuit has held that impeachment by contradiction is not permitted on collateral matters. United States v. Hawkins, 661 F.2d 436, 444 (5th Cir. 1981), cert. denied, 102 S.Ct. 2274 (1982); United States v. Williamson, 424 F.2d 353, 356 (5th Cir. 1970); Head v. Halliburton Oilwell Cementing Co., 370 F.2d 545, 546 (5th Cir. 1966). This ruling is also consistent with Fed. R. Evid. 608(b). This so-called "collateral" rule -- i.e., that extrinsic evidence is not admissible to show a specific contradiction on a matter classified as collateral -- is a distinct limitation on the scope of impeachment by contradiction that is otherwise allowed. 3 WEINSTEIN'S EVIDENCE, ｶ 607 [05], and cases cited therein. The need for this limiting rule stems from practical considerations. "To permit disputes at trial about such extraneous or 'collateral' facts that are material only for 'testing' a witness, by allowing the attacker to call other witnesses to disprove them, is not practical. Dangers of surprise, of confusion of the jury's attention, and of time
Page 28... wasting are apparent." C. McCORMICK'S HANDBOOK OF THE LAW OF EVIDENCE, ｧ 47 (2d ed. 1972). If the collateral fact sought to be contradicted is elicited on cross-examination, this safeguarding rule (that a witness may not be impeached by producing extrinsic evidence of "collateral" facts to "contradict" the first witness' assertions about those facts) is sometimes expressed by saying that the party cross-examining is bound by the witness' answer. United States v. Cohen, 631 F.2d 1223, 1226 (5th Cir. 1980). In Cohen, the defendant sought to attack the credibility of a government witness by showing via another witness that the government witness had been involved in drug law violations. The Fifth Circuit stated: It is doubtful that the original cross- examination of [the Government witness] about his drug trafficking was appropriate . . . but there was no objection. When such testimony does go in, "the examiner must take his answer," and the examiner cannot offer impeachment testimony. As Rule 608 states, "[s]pecific instances of the conduct of a witness, for the purpose of attacking . . . his credibility . . . may not be proved by extrinsic evidence . . ." Id. at 1226. If the "collateral" fact happens to have been drawn out on direct examination, Dean McCormick suggests that the rule against contradiction should still be applied, because despite the lessened danger of surprise, "waste of time and confusion of issues stand as objections." Page 29...... OF EVIDENCE, ｧ 47 (2d ed. 1972). B. Introduction Of Documentary Evidence 1. Conspirators' Records of Bid Rigging Are Admissible as Business Records Under Fed. R.Evid. 803(6). A conspirator's records or notes of bid rigging or bid-rigging conversations that were regularly prepared as part of the scheme charged are admissible under Fed. R. Evid. 803(6) as records of regularly conducted business activity. In United States v. Hyde, 448 F.2d 815, 846 (5th Cir. 1971), cert. denied, 404 U.S. 1058 (1972), the Fifth Circuit held that handwritten notes of a meeting, kept on note cards, the author of which testified that he regularly kept informal notes of transactions in similar situations, were admissible as business records. The court stated, "[m]aking memoranda of the details of a complicated oral business agreement" would be within the business records exception. Id. Similarly, in United States v. Sheppard, 688 F.2d 952 (5th Cir. 1982), the court upheld the admission at trial as business records of freight bills with handwritten notations on them, finding that the bills were "drawn up and notations made thereon as a regular practice of the freight company in the course of a regularly conducted business activity. Such records are clearly admissible under 803(6)." Id. at 953. The fact that the notes are handwritten records does not affect their admissibility. See, e.g., Gulf South Machine, Inc. v. Kearney and Trecker Corp., 756 F.2d 377, 381
Page 30...... (5th Cir.), cert. denied, 474 U.S. 902 (1985)(upholding admission of a handwritten log book recording malfunctions of company machines when those entries were made by the machine operators); Sheppard, 688 F.2d at 953; United States v. Gremillion, 464 F.2d 901, 907 (5th Cir.), cert. denied, 409 U.S. 1085 (1972) (business worksheet with handwritten notation in the margin fully met the requirements of admissibility under the business records exception); Hyde, 448 F.2d at 846. Finally, whether the business records contain illegal information or detail illegal transactions is irrelevant. United States v. Thompson, 811 F.2d 841, 846 (5th Cir. 1987) (savings and loan application that contained false and illegal information admissible under 803(6)); United States v. Tafoya, 757 F.2d 1522, 1528-29 (5th Cir.), cert. denied, 474 U.S. 921 (1985) (no error in admitting memorandum containing potentially false billing information). 2. Co-Conspirators' Records of Bid Rigging Are Also Admissible as Co-Conspirator Statements Under Fed. R. Evid. 801(d)(2)(E). In addition to being admissible business records, records of bid-rigging are admissible as co-conspirator statements. The Fifth Circuit has interpreted the co-conspirator exception in Rule 801(d)(2)(E) broadly, allowing its use to
Page 31........ introduce a wide variety of writings. For example, in United States v. Evans, 572 F.2d 455, 488 (5th Cir.), cert. denied, 439 U.S. 870 (1978), the court found that daily appointment calendars maintained by one defendant were admissible against that defendant as admissions, and against all defendants as co-conspirator statements because the writings "tended to promote and further the conspiracy." In United States v. Postal, 589 F.2d 862, 886 n.41 (5th Cir.), cert. denied, 444 U.S. 832 (1979), admission of a ship's logbook under the co-conspirator exception was upheld. Finally, in United States v. Mazyak, 650 F.2d 788, 791 (5th Cir. 1981), cert. denied, 455 U.S. 922 (1982), nautical charts on a seized vessel were admitted as co-conspirator statements. 3. Business Records Prepared By One Company and Received and Kept By Another Are Admissible Under Fed. R. Evid. 803(6). Rule 803(6) is premised on the idea that records of regularly conducted activity carry with them sufficient indicia of reliability to warrant admission. Reliability or trustworthiness is supplied by the Rule's requirements of systematic checking, of regularity and continuity which produce habits in precision, of actual experience of business in relying upon such records, or by a duty to make an accurate record as part of a continuing job or occupation. Advisory Committee Notes to Rule 803(6). In United States v. Flom, 558 F.2d 1179, 1182 (5th Cir. 1977)(citations omitted), the trial court admitted into
Page 32...... evidence under Rule 803(6) invoices received and held by defendant's company, but which were prepared and sent by another company. Foundation testimony was offered through an official of defendant's company that the invoices were received and held in the regular course of business. No testimony of the preparing company was offered. The Fifth Circuit held that "the law is clear that under circumstances which demonstrate trustworthiness it is not necessary that the one who kept the record, or even had supervision over their preparation, testify . . ." Id. See also Mississippi River Grain Elevator, Inc. v. Bartlett & Co., Grain, 659 F.2d 1314, 1319 (5th Cir. 1981); United States v. Veytia-Bravo, 603 F.2d 1187, 1191-92 (5th Cir. 1979) ("Rule 803(6) does not require that the records be prepared by the business which has custody of them."), cert. denied, 444 U.S. 1024 (1980); United States v. Coyler, 571 F.2d 941, 947 (5th Cir. 1978) (noting that the question "was settled" in Flom). 4. A Summary Chart Reflecting The Contents of Voluminous Business Records is Admissible Under Fed. R. Evid. 1006 Where Examination of Those Records Individually is Inconvenient. Fed. R. Evid. 1006 expressly provides that the contents of voluminous documents may be introduced into evidence in the form of a chart, summary, or calculation where it would be impractical or inconvenient to examine those documents individually. Rule 1006 is designed to save the court time and to aid the jury in understanding and evaluating complex and
Page 33.. fragmentary information. During the course of the investigation which led to this Indictment, the defendant's employer and other competitors, and the victim school districts and other institutions, were served with grand jury subpoenas requiring, among other things, the production of business records which would reflect the prices they bid for school grocery contracts between 1985 and May 1990. The subpoenaed parties responded by producing numerous bids, sales invoices, work orders, and billing statements to the grand jury. The government has now reviewed these documents and prepared an accurate summary of estimated total food purchases by school districts and other institutions affected by the conspiracy for use as evidence in the trial of this case. This exhibit clearly and succinctly summarizes and reflects the information contained in the documents submitted to the grand jury. In addition to this summary, the government intends to offer a summary of the documents received from Frosty Acres Brands, Inc., a buying cooperative through which the defendant's employer purchased supplies during the period of this Indictment. This summary is intended to show how the Sherman Act conspiracy affected interstate commerce. In order to be admissible as evidence under Rule 1006, several conditions must be met. First, the underlying documents must be voluminous. United States v. Duncan, 919 F.2d 981, 988 (5th Cir. 1990), cert. denied, 111 S.Ct. 2036 (1991); see also United States v. Robinson, 774 F.2d 261, 276 (8th Cir.
Page 34...... 1985). It is not, however, required that the underlying documents contain complex calculations to be eligible for summation. Robinson, 774 F.2d at 276. Likewise, there is no requirement that it be "literally impossible to examine all the underlying records, but only that in-court examination would be an inconvenience." United States v. Possick, 849 F.2d 332, 339 (8th Cir. 1988). The vast number of documents which form the underlying data for the government's summary exhibits easily qualify as voluminous writings which cannot conveniently be examined in court. Second, a Rule 1006 summary must be based on documents which are themselves admissible in evidence. Ford Motor Co. v. Auto Supply Co., Inc., 661 F.2d 1171, 1175 (8th Cir. 1981). It is not necessary, however, for the underlying documents to be actually admitted into evidence. United States v. Smyth, 556 F.2d 1179, 1184 (5th Cir.), cert. denied, 98 S.Ct. 190 (1977). Whether or not originals are introduced at trial, the summary may be relied on as evidence-in-chief. 5 J. Weinstein and M. Berger, WEINSTEIN'S EVIDENCE, ｧ 1006[02] (1992). The underlying data in this case consists of the business records of the school districts involved in the conspiracy and, the business records of a buying cooperative, and thus, is admissible under Fed. R. Evid. 803(6). The government has tendered to defense counsel a stipulation concerning the admissibility of these underlying documents as business records in an effort to streamline the trial of this case and prevent a waste of the
Page 35... Court's time. Third, in order for a Rule 1006 summary to be admissible, the originals or duplicates of the underlying materials must be made available for examination or copying by the other parties, at a reasonable time and place. Evans, 572 F.2d at 492. The defendant in this case has had unlimited access to the underlying documentation and, in fact, has been permitted to inspect and copy these materials. Finally, a Rule 1006 summary must be an accurate summarization of the underlying materials involved. White Industries v. Cessna Aircraft Co., 611 F. Supp. 1049, 1070 (W.D. MO. 1985). This requirement must, however, be approached sensibly since some human error in transcribing or collating a voluminous mass of documents is practically inevitable. Id. The government has made every effort to insure the accuracy of these summaries. In addition, the government has provided defense counsel with a copy of the summaries prior to trial so that any challenge to the accuracy of the exhibit may be addressed in a pre-trial conference. See Fed. R. Crim. P. 17.1. The Fifth Circuit has also allowed summary exhibits or charts to be admitted into evidence where the underlying data has been admitted into evidence. United States v. Winn, 948 F.2d 145, 158-59 (5th Cir. 1991), cert. denied, 112 S.Ct. 1599 (1992); Duncan, 919 F.2d at 988; United States v. Stephens, 779 F.2d 232, 239 (5th Cir. 1985). The evidentiary use of summaries under these conditions rests with the sound discretion of the trial
Page 36..... judge. Id. Merely because the underlying documents are already in evidence does not mean that they can be conveniently examined in court, and a more restrictive reading of Rule 1006 would be clearly inconsistent with one proper method of laying a foundation for admission of summary charts -- admitting the documentation on which the summary is based. See Winn, 948 F.2d at 158-59; Stephens, 779 F.2d at 239. In addition, prior introduction of the underlying evidence would comply with the requirement that the documents be made available for examination or be produced in court since, if the evidence were already introduced, it would certainly have been produced in court. Evans, 572 F.2d at 491. Therefore, even where the underlying data is already in evidence a summary of that evidence may also be admitted. By design, any summary "must rest on certain assumptions." United States v. Diez, 515 F.2d 892, 905 (5th Cir. 1975) (illustrative charts used by the government allowed into evidence to show attribution of income). The summaries do not have to be free from assumptions but must rely on assump- tions "supported by evidence in the record." Id. Where the witness who will introduce the summary chart has detailed personal knowledge about the underlying documents from which the summary was prepared, and has carefully reviewed the summary and verified its accuracy, any assumptions contained in the summary chart will be supported by the record. See United States v. Lemire, 720 F.2d 1327, 1349 (D.C. Cir. 1983), cert. denied, 467
Page 37.. U.S. 1226 (1984) (preparation of summary charts by someone other than the witness not objectionable where the witness carefully reviews the charts to ensure that they reflect information already in evidence). CONCLUSION The government respectfully submits this Memorandum in support of the substantive and evidentiary issues of law that may arise during the trial of this case. Respectfully submitted, _______________/s/________________
JANE E. PHILLIPS _______________/s/________________
JOAN E. MARSHALL _______________/s/________________
MARK R. ROSMAN Attorneys Antitrust Division U.S. Department of Justice Earle Cabell Federal Bldg. 1100 Commerce Street, Room 8C6 Dallas, Texas 75242-0898 Tel: (214) 767-8051
Page 38 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the United States' Pre-Trial Memorandum of Law has been served via Federal Express this 16th day of February, 1994, to: Lynne Liberato, Esq. Haynes And Boone, L.L.P. 1600 Smith Street Suite 3700 Houston, Texas 77002-3445 Joel M. Androphy, Esq. Berg & Androphy 3704 Travis Street Houston, Texas 77002 _______________/s/________________
MARK R. ROSMAN
Attorney . | 
U.S. Department
of Justice
