United States v. Suntar Roofing, Inc. And David Kevin Pratt

897 F.2d 469, 29 Fed. R. Serv. 1170, 1990 U.S. App. LEXIS 2625
CourtCourt of Appeals for the Tenth Circuit
DecidedFebruary 27, 1990
Docket89-3113, 89-3114
StatusPublished
Cited by77 cases

This text of 897 F.2d 469 (United States v. Suntar Roofing, Inc. And David Kevin Pratt) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth 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. Suntar Roofing, Inc. And David Kevin Pratt, 897 F.2d 469, 29 Fed. R. Serv. 1170, 1990 U.S. App. LEXIS 2625 (10th Cir. 1990).

Opinion

BRORBY, Circuit Judge.

Appellants Suntar Roofing, Inc. (Suntar), and David Kevin Pratt (Pratt), president and part-owner of Suntar, appeal their convictions for unreasonably restraining inter *472 state trade and commerce in violation of § 1 of the Sherman Act (15 U.S.C. § 1).

Appellants were indicted along with fellow defendants Ronan’s Roofing, Inc. (Ro-nan’s Roofing), and its president, Michael T. Ronan (Ronan). Additionally, in its bill of particulars the government identified three unindicted co-conspirators: (1) Tom Keaton (Keaton), a part-owner of Suntar and another roofing company, Keaton Brothers Roofing and Siding, Inc.; (2) Andy Boxley (Boxley), a Suntar employee during the alleged conspiracy; and (3) Samuel K. “Bud” Fleenor (Fleenor), an employee of Ronan’s Roofing. At all relevant times, Suntar and Ronan’s Roofing were Kansas corporations engaged in the business of constructing and installing cedar shake (shingle) roofs on single and multifamily homes in and around Kansas City, Kansas.

The indictment charged that the defendants and co-conspirators engaged in a continuing agreement, understanding and concert of action to allocate and divide among themselves customers for the construction and installation of roofs on new single and multi-family homes in the Kansas City, Kansas metropolitan area. The indictment further charged that commencing in or about June 1985 and continuing through mid-1986, the defendants and co-conspirators met to discuss prices, individual roofing projects, and the means to allocate specific customers between the two companies. The government alleged that they agreed to stop competing and refrained from competing for the business of each company’s established customers.

The jury returned a verdict of not guilty as to defendants Ronan’s Roofing and Ro-nan and a verdict of guilty as to defendants Suntar and Pratt. Appellants now challenge their convictions on the following bases: (1) that the trial judge erroneously treated the alleged activity as a “per se” violation of the Sherman Act; (2) that the jury instructions erroneously described the elements of the offense charged and that there was insufficient evidence to establish each element; (3) that the trial judge improperly admitted evidence of similar acts under Fed.R.Evid. 404(b); and (4) that the trial judge violated appellants’ Sixth Amendment right to effective counsel by failing to require Suntar’s counsel to withdraw because of a conflict of interest. We affirm.

ANALYSIS

A. Per Se Violation of the Sherman Act

Appellants contend that the trial court erred when it sustained the government’s pre-trial motion to prevent the defendants from offering evidence of the reasonableness and/or economic justification for the alleged activities or evidence of the defendants’ lack of intent to violate the law or to restrain trade. Thus, appellants allege that they were deprived of any opportunity to present evidence that the conduct charged was permissible under “rule of reason” analysis and that the jury was deprived of its factfinding function to determine whether the charged conduct unreasonably restrained competition.

Section 1 of the Sherman Act prohibits “[ejvery contract, combination ..., or conspiracy, in restraint of trade or commerce.” Generally, courts apply a “rule of reason” analysis to determine whether particular practices or conduct come within the ambit of the statute. Under “rule of reason” analysis, the factfinder weighs all of the circumstances of a case to decide whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition. Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49, 97 S.Ct. 2549, 2557, 53 L.Ed.2d 568 (1977).

However, since the passage of the Sherman Act, the courts have formulated and applied a per se rule of illegality for certain restrictive practices that are deemed to be manifestly anticompetitive. Id. at 50, 97 S.Ct. at 2557. As the Supreme Court explained in Northern Pac. R. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958), “there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and *473 therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.” Here, appellants argue that the indictment in this ease did not justify the trial court’s application of per se analysis in that the restraint charged is not clearly “pernicious” as a matter of law.

In its pre-trial motion, the government argued that the conduct charged in the indictment, a “horizontal” customer allocation agreement, 1 represented conduct which is illegal per se. Prior to trial, the trial court ruled that the indictment did in fact allege a per se violation of the Sherman Act, and that, assuming the government could present evidence establishing the violation charged in the indictment, the defendants would therefore be precluded from introducing evidence of reasonableness or justification at trial. At trial, the court concluded that the government had established the violation charged and therefore precluded defendants’ additional evidence.

Consistent with the analysis of the Supreme Court and previous holdings of this court and of other circuits, we concur with the determination of the trial court and hold that the activity alleged in the indictment in this case, an agreement to allocate or divide customers between competitors within the same horizontal market, constitutes a per se violation of § 1 of the Sherman Act. See United States v. Topco Assocs., Inc., 405 U.S. 596, 608, 92 S.Ct. 1126, 1133, 31 L.Ed.2d 515 (1972) (“[o]ne of the classic examples of a per se violation of § 1 is an agreement between competitors at the same level of the market structure to allocate territories in order to minimize competition”); United States v. Goodman, 850 F.2d 1473, 1476 (11th Cir.1988) (“customer allocation agreement alone is a per se violation of 15 U.S.C. § 1”) (citing United States v. Cadillac Overall Supply Co., 568 F.2d 1078, 1090 (5th Cir.), cert. denied, 437 U.S. 903, 98 S.Ct. 3088, 57 L.Ed.2d 1133 (1978)); United States v. Cooperative Theatres of Ohio, Inc., 845 F.2d 1367, 1372 (6th Cir.1988) (“customer allocation ... is the type of ‘naked restraint’ which triggers application of the per se rule of illegality”); Mid-West Underground Storage, Inc. v. Porter,

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Bluebook (online)
897 F.2d 469, 29 Fed. R. Serv. 1170, 1990 U.S. App. LEXIS 2625, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-suntar-roofing-inc-and-david-kevin-pratt-ca10-1990.