United States v. Koppers Company, Inc.

652 F.2d 290, 1981 U.S. App. LEXIS 11896
CourtCourt of Appeals for the Second Circuit
DecidedJune 29, 1981
Docket915, Docket 80-1362
StatusPublished
Cited by74 cases

This text of 652 F.2d 290 (United States v. Koppers Company, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Koppers Company, Inc., 652 F.2d 290, 1981 U.S. App. LEXIS 11896 (2d Cir. 1981).

Opinion

MANSFIELD, Circuit Judge:

Defendant, Koppers Company, Inc. (“Koppers”), appeals from a judgment of conviction entered on August 28, 1980, by Judge Ellen Bree Burns of the United States District Court for the District of Connecticut after a jury had found Koppers guilty of a felony violation of § 1 of the Sherman Act, 15 U.S.C. § l. 1 The indictment under which Koppers was convicted charged that “[bjeginning sometime prior to January 1970 and continuing until at least March 1975” Koppers and Dosch-King Company, Inc. (“Dosch-King”), had engaged in a conspiracy to rig bids and allocate territories in the sale of road tar to the State of Connecticut and its subdivisions. Dosch-King pleaded nolo contendere, cooperated with the government, and was fined $40,000; Koppers stood trial, was convicted, and was fined $400,000. 2

We affirm. Since the jury was justified in finding that Koppers’ conspiratorial conduct constituted a per se violation of § 1 of the Sherman Act, there was no requirement that the jury go on to find that that conduct also resulted in an unreasonable restraint of trade.

In each year of the early 1970s the State of Connecticut solicited bids on an annual *292 basis for the sale and application of road tar, a substance used to resurface and repair its secondary roads. 3 Any contracts eventually awarded for the purchase of road tar by the 169 towns and four state road maintenance districts in Connecticut had to be based on these bids. During the period covered by the indictment, Koppers and Dosch-King were the only participants in the road tar bidding. Koppers, a producer of road tar, had its plant in Kearney, N.J., and distributed its product in Connecticut from a storage facility in Portland, Connecticut, located in the eastern part of the state and owned by Mystic Bituminous Products Co. Dosch-King at all relevant times had its distribution points in Newton and New Haven, located in western Connecticut. Koppers produced all of the road tar which it sold in Connecticut. Prior to 1973 Dosch-King purchased most of its road tar from Reilly Tar and Chemical Corporation, occasionally making purchases from Koppers. Beginning in 1973, Dosch-King started buying all of its road tar from Kop-pers, and it continued to do so throughout the remaining period of the indictment. Nevertheless, Dosch-King’s bids at all times reflected transportation costs measured from its facilities in the eastern part of Connecticut.

Arthur Schuck, Koppers’ manager of its eastern road materials district, made a proposal to Dosch-King in 1967 that the two firms divide the state between them so that Dosch-King would be the low bidder in the western part of Connecticut, where its activities were concentrated, and Koppers would be the low bidder in the eastern part, where its storage facility and distribution point were located. To accomplish this, Koppers would communicate its plant-side price and its estimated application cost to Dosch-King prior to the bidding deadline, so that both companies could use these confidential figures as the basis for their bids. Since the two firms were based at opposite ends of the state, the use of a common base price and application cost would have the effect of making each company the low bidder in its half of the state, because of the increasing transportation costs each would incur as they bid on deliveries further and further from home. The companies would, however, continue to submit bids in all 169 Connecticut towns and all four maintenance districts, which would give the impression that they were in direct competition for the state’s business even though they would know in advance which of their bids would be successful. After examining Schuck’s proposal to make sure that it would in fact result in the approximately even division of the state’s road tar business which Schuck had promised, Dosch-King agreed to the proposal. 4

With minor variations not relevant here, the two parties followed the same basic pattern in making bids each year from 1968 to 1975. Each January Schuck would meet with Dosch-King officials to give them Kop-pers’ plant-side base price and to assure them that Koppers was planning to adhere to the conspiracy. On the day before bids were due, Schuck would meet with Dosch-King personnel in Hartford. At these meetings, Schuck would give Dosch-King the bids which Koppers was going to make on the four maintenance districts, as well as the application rate which Koppers would be using in its town bids. With these figures in hand, Dosch-King was able to calculate exactly how much Koppers would be bidding in each town and maintenance district. In 1968, Dosch-King’s bids were *293 based on the formula worked out with Schuck. In later years Dosch-King simply calculated Koppers’ bid for each town, and then adjusted its own bids so that it would win in the west and lose in the east. The result was that from 1968 through 1974 Koppers and Dosch-King succeeded in covertly dividing up the Connecticut road tar business on a roughly 50-50 basis.

In January, 1975, the companies once again submitted their bids in the normal manner but the State of Connecticut rejected them and called for a second round of bidding. When Dosch-King personnel contacted Schuck prior to the second round in order to get Koppers’ base price, Schuck gave it to them, but informed them that the price would also be made available to the public. When Schuck was asked by Dosch-King whether this meant that “the deal we have had is over,” he confirmed that it did. This second round of bidding, untainted by the Koppers/Dosch-King conspiracy, resulted in a notably different pattern of awards: Koppers ended up winning no awards at all, while Dosch-King’s bids were somewhat lower than the ones it had submitted in January.

DISCUSSION

On this appeal Koppers’ principal challenge is to the charge given by Judge Burns on the question of per se violations of the Sherman Act:

“The Sherman Act is violated only by ‘unreasonable’ restraints of trade. Not all restraints of trade are unreasonable; however, certain types of conduct are regarded as unreasonable per se. This means that the mere doing of the act itself constitutes an unreasonable restraint on commerce and it is not necessary to consider why the acts were committed or what effect it had on the industry. Agreements among competitors to rig bids or allocate customers are such per se unreasonable restraints of trade and illegal.
“In this case, members of the jury, if you find beyond a reasonable doubt that the defendant was a competitor of Dosch-King Company in the submission of bids to the State of Connecticut for road tar and became party to the conspiracy charged in the indictment, then you do not have to decide whether such conspiracy was reasonable or unreasonable because as I have just explained, an agreement among competitors to allocate customers and territories and not to compete for customers by submitting collusive bids is a per se violation of the Sherman Act.”

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Bluebook (online)
652 F.2d 290, 1981 U.S. App. LEXIS 11896, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-koppers-company-inc-ca2-1981.