895 F.3d 673
9th Cir.2018Background
- Thomas Joyce was indicted for conspiring to suppress competition by rigging bids for foreclosed real property at public auctions in Contra Costa County, California.
- The indictment alleged agreements to refrain from bidding, designate winners, purchase at suppressed prices, and arrange payoffs including private auctions to allocate payoffs/winners.
- Joyce moved pretrial to require the government to prove illegality under the rule of reason and to admit evidence of claimed procompetitive effects; the district court denied the motion, treating bid rigging as per se illegal.
- Joyce was convicted and sentenced to 12 months and one day imprisonment; he appealed, arguing the district court should have applied the rule of reason and admitted evidence of procompetitive effects.
- The Ninth Circuit considered whether bid rigging is a per se violation of Section 1 of the Sherman Act and whether the district court erred by excluding evidence of market effects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether bid rigging is a per se violation of Section 1 | Joyce: per se rule inapplicable; must apply rule of reason because scheme was narrow and had no demonstrable market effect | Gov't: bid rigging is a form of horizontal price fixing and is per se illegal | Court: Bid rigging is per se illegal under Section 1 |
| Whether district court erred by excluding evidence of procompetitive effects | Joyce: evidence of ameliorative/procompetitive effects should be admissible under rule of reason | Gov't: such evidence irrelevant if per se rule applies | Court: Exclusion proper because per se rule eliminates need to examine procompetitive claims |
| Whether industry-specific unfamiliarity affects per se application | Joyce: foreclosure auctions are a narrow, unfamiliar market—per se rule should not automatically apply | Gov't: per se rule applies across industries regardless of familiarity | Court: Industry unfamiliarity irrelevant; Maricopa controls and per se applies uniformly |
| Whether government must prove specific intent to harm competition | Joyce: argued necessity to show market harm/intent | Gov't: per se allegation removes need to prove specific intent or market effects | Court: Government need not prove specific intent where per se violation alleged |
Key Cases Cited
- Arizona v. Maricopa Cty. Med. Soc’y, 457 U.S. 332 (1982) (per se rule applies to price-fixing across industries; procompetitive justifications generally irrelevant)
- Northern Pacific Railway Co. v. United States, 356 U.S. 1 (1958) (per se rule avoids elaborate economic inquiry; certain restraints conclusively presumed unreasonable)
- United States v. McKesson & Robbins, Inc., 351 U.S. 305 (1956) (horizontal price fixing is per se illegal)
- United States v. Fenzl, 670 F.3d 778 (7th Cir. 2012) (characterizes bid rigging as a form of price fixing)
- United States v. Bensinger Co., 430 F.2d 584 (8th Cir. 1970) (describes bid rigging as a simple price-fixing agreement)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (discusses when rule-of-reason analysis is necessary vs. per se categories)
- A. Lanoy Alston, D.M.D., P.C. v. United States, 974 F.2d 1206 (9th Cir. 1992) (in criminal antitrust prosecutions, per se allegations relieve government of proving specific intent)
- Socony-Vacuum Oil Co. v. United States, 310 U.S. 150 (1940) (establishes the uniform per se rule against price-fixing regardless of asserted industry justification)