717 F.2d 593 | D.C. Cir. | 1983
Opinion for the Court filed by Circuit Judge WILKEY.
Most of the iron ore used in the “Steel Belt” of Pennsylvania, West Virginia, Ohio, and Kentucky comes from mines in the northwestern Great Lakes region and east
Along with other rail carriers, the appellant was charged under the Sherman Antitrust Act with conspiring to inhibit or eliminate competition. The alleged conspiracy involved concerted action by several railroads to forego competition among themselves, to eliminate or reduce competition from independent private docks, and to eliminate or reduce competition from motor carriers. The appellant was convicted pursuant to a plea of nolo contendere, but subsequently appealed.
This appeal raises three issues: (a) whether appellant’s nolo contendere plea in the district court prevents this court from entertaining appellant’s attack on the legal sufficiency of the indictment, (b) whether the doctrine of primary jurisdiction requires referral of this case to the Interstate Commerce Commission, and (c) whether section 5a of the Interstate Commerce Act immunizes appellant’s conduct from prosecution under the antitrust laws.
I.Background
A. Legal Background
For many years the Interstate Commerce Commission has regulated the rates set by rail carriers.
In the mid-1940’s the tension between the ICC’s policy of permitting joint action through rate bureaus and the policy expressed in the antitrust laws of forbidding cartels became more marked. In 1944 the Antitrust Division of the Justice Department sought to enjoin several western railroads from rate-setting practices which allegedly violated the Sherman Act.
Congress responded in 1948 by passing the Reed-Bulwinkle Act,
B. Factual Background
The appellant in this ease joined a rate bureau formed soon after the passage of the Reed-Bulwinkle Act. The original agreement won ICC approval in 1950.
The anticompetitive activity prosecuted here arises not from the formation of the rate bureau, but from the response of the members of the rate bureau to a technological innovation in carrying iron ore across the Great Lakes. At the time the rate bureau was formed, ships known as “bulkers” transported virtually all iron ore to Lake Erie docks in an unprocessed, mud-like form.
The railroads owned the unloading facilities and docks used to service the huletts.
In the early 1950’s a new technology developed for “pelletizing” the ore into high-grade pellets the size of marbles.
The new pelletization technology threatened to render obsolete the substantial investment the railroads had made in huletts and other unloading facilities. In addition, the new technology created the prospect that private docks not equipped with huletts — which had been unable to compete for the business of unloading bulkers— could now compete for the business of self-unloaders. The entry of private docks into the business would break the railroads’ control over the shipment of iron ore from the freighters to the steel mills.
Those railroads charged in the indictment responded to the new technology by reaching a new, separate agreement “as early as” 1956.
(a) to inhibit or eliminate competition from private docks in the handling of iron ore on Lake Erie;
*320 (b) to inhibit or eliminate competition among themselves in the transshipment of iron ore without seeking or obtaining ICC approval in accordance with the 5a Agreement procedures; and
(c) to inhibit or eliminate competition from motor carriers in the transportation of iron ore from docks on Lake Erie to steel mills.21
Over the ensuing years, the members of the conspiracy took a series of actions to implement their agreement.
(a) removing private docks from line haul tariffs filed with the ICC in Washington, D.C. so as to prevent such docks from handling iron ore from self-unloaders;
(b) amending line haul tariffs filed with the ICC in Washington, D.C. to provide that commodity line haul rates would apply only from railroad-owned docks;
(c) refusing to grant commodity line haul rates for rail movements of iron ore from private docks to steel mills;
(d) quoting the same charges for handling iron ore from self-unloaders as from bulkers even though services identified in the applicable tariffs were not to be performed;
(e) foregoing the right of independent action with respect to handling charges for iron ore from self-unloaders;
(f) refusing to lease railroad dock space to Litton Industries for the handling of iron ore from self-unloaders;
(g) without seeking or obtaining ICC approval in accordance with the 5a Agreement procedure, refraining from independently or collectively reducing line haul rates for rail movements of iron ore in order to meet truck competition;
(h) seeking to eliminate the trucking of iron ore from Pinney Dock, a private dock on Lake Erie; and
(i) seeking to prevent the trucking of iron ore from a railroad controlled dock at Lorain, Ohio by establishing an arbitrary usage charge applicable only to the transportation of iron ore by truck.24
In 1981 the government brought an indictment charging that the 1956 agreement of the railroads to eliminate the competition created by self-unloaders violated the Sherman Antitrust Act.
II. Analysis
A. Appeal from Plea of Nolo Contendere
The appeal in this case follows a plea of nolo contendere by the appellant. For the purposes of this appeal, the plea of nolo contendere has the effect of a guilty plea.
The government argues that the appellant’s nolo plea bars consideration of this appeal.
It is true, as the government asserts, that in many cases courts have refused to consider “defenses” raised after the entry of a nolo plea. These cases, however, do not address defenses which go to the issue of whether the indictment itself alleges a criminal violation, but instead generally refer to one of three situations. First, some courts have refused to entertain appeals from a guilty or nolo plea which would require either the government or the appellant to offer additional facts for proof. This rule prevents the defendant from presenting additional factual arguments which are inconsistent with the indictment.
All three lines of cases draw on a single unifying principle — the entry of a nolo plea bars any subsequent defense or argument that looks outside the indictment. No “defense” may be raised which draws on additional facts, procedural defects or changes in substantive law. However, the entry of a nolo plea does not prevent raising a “defense” which requires no reference beyond the “four corners” of the indictment. A party convicted subsequent to a nolo plea may still argue that the facts in the indictment simply do not add up to a criminal offense.
The “defense” asserted by the appellant represents the sort of challenge which can be raised even after the entry of a nolo plea. The appellant argues, in essence, that the substantive law governing its case is provided not by the Sherman Antitrust Act alone, but by the Sherman Antitrust Act taken together with section 5a of the Interstate Commerce Act. Under the law stated by these two acts, it urges, the indictment fails to charge an offense.
It does not advance the inquiry to split hairs over whether the absence of section 5a immunity is a predicate for invoking the Sherman Act, or whether the presence of section 5a immunity must be raised as an affirmative defense. In either case, facts sufficient to raise the claim are contained within the indictment itself; .in either case, the burden of criminal persuasion remains on the government.
While the nolo plea does not bar our review of the appellant’s claims, it does define our review. We must assume the truth of every factual allegation in the indictment. We may not consider any argument by the appellant which would rely on facts not within the four corners of the indictment, nor may we accept any interpretation of the indictment which would require the government to respond with additional explanatory facts. We may only consider whether the indictment, as it stands, states an offense.
Appellant suggests,
Put simply, the time for urging the doctrine of primary jurisdiction has passed in this case. As we have discussed, the entry of the nolo plea bars all issues but those involving subject matter jurisdiction and the legal sufficiency of the indictment.
C. Immunity
The appellant — admitting the truth of the factual allegations of the indictment — seeks refuge in the immunity granted by section 5a.
In assessing appellant’s argument, it is important first to stress the limited nature of section 5a immunity. The language of the statute flatly declares that the haven of section 5a is not all-encompassing; to the contrary, it is specifically limited to those actions taken “in conformity with”
The legislative history underscores the limits on section 5a’s protection. At the time the Act was passed, at least two major actions were pending against rate bureaus for alleged violations of the antitrust
The bill leaves the antitrust laws to apply with full force and effect to carriers, so far as they are now applicable, except as to such joint agreements or arrangements between them as may have been submitted to the [ICC] and approved by that body .. . ,49
This Circuit has had earlier occasion to pass upon the scope of the 5a privilege. In Atchison, Topeka and Santa Fe Railway Co. v. Aircoach Transport Ass’n,
Even though it should be found in the end that the practices as such have been validly immunized by section 5a approved agreements, nevertheless, if they are part of an effort by Railroads in combination or conspiracy to eliminate the competition of Aircoach, rather than used merely to meet that competition, the practices would be removed from the protection of section 5a(9). We do not think the Act or any agreement which has been approved under it can be construed as authorizing the use of such practices for the purpose of eliminating the competition of Air-coach for the section 22 transportation involved.51
The appellant argues that Aircoach does not apply to this case. The crux of the appellant’s argument is that Aircoach spoke only to a situation where the rates involved were not subject to ICC remedial jurisdiction.
The statutory language, the legislative history, and the case law all point to the same conclusion: the section 5a immunity reaches only those actions actually taken “in conformity with” the rate agreement and the terms and conditions laid down by the ICC. It does not sweep within it a larger conspiracy which utilizes a section 5a rate bureau as a means to an end; it does not legitimize illegal schemes which happen to coincide at points with the legitimate actions of a rate bureau.
The activities described in the indictment do not fit within the narrow 5a privilege. First, the indictment does not attack the rate bureau itself. It alleges, instead,
More than mere purpose or “intent” distinguished this separate conspiracy from the rate bureau. Several of the actions taken by this separate conspiracy were not “in conformity with” the rate bureau’s 5a rate agreement.
Some of the actions were procedurally inconsistent with section 5a. Paragraph 23(d) of the indictment alleges that defendants “quot[ed] the same charges for handling iron ore from self-unloaders as from bulkers even though services identified in the applicable tariffs were not to be performed.”
The defendant responds that the indictment does not allege any failure to adhere to section 5a procedures.
Other acts alleged in the indictment are inconsistent with the substantive
The appellant contends that the refusal to lease dock space was merely “ancillary” to the rate structure.
Still other acts alleged in the indictment had nothing at all to do with making or carrying out a section 5a rate agreement. In section 23(h) the indictment alleges that
The appellant responds that the bill of particulars reveals that the scheme to terminate the competitive trucking service in fact turned on ratemaking — a member of the conspiracy offered to haul iron ore from the private dock at a lower rate if the truckers were denied access.
The facts admitted by the appellant clearly show that the actions of the conspirators exceeded the bounds of what could be done “in conformity with” a 5a rate agreement. The ICC did not and legally could not have condoned the acts taken by the conspirators. The statutory language, the legislative history, and the subsequent case law all agree that the immunity cannot extend beyond just those acts taken in conformity with the rate agreement. The conclusion, then, must be that appellant cannot rely on the immunity granted by section 5a. Having failed to fit its actions within the zone protected by the Act the appellant must do without its protection.
III. Conclusion
For the reasons stated, the judgment of the district court is
Affirmed.
. 49 U.S.C. § 15(1) (1976); Iron Ore Rate Cases, 41 I.C.C. 181 (1916), 44 I.C.C. 368 (1917).
. See United States v. Trans-Missouri Freight Ass’n, 166 U.S. 290, 17 S.Ct. 540, 41 L.Ed. 1007 (1897); see generally C. Fulda, Competition in the Regulated Industries: Transportation 283 (1961).
. See In re Trans-Continental Freight Bureau, 77 I.C.C. 252 (1923) (approving clearinghouse for information relating to tariffs); see generally Dickinson, Rate Conferences in the Railroad Industry Under the Sherman Act and the Act to Regulate Commerce, 12 Law & ContempProb. 470 (1947).
. United States v. Assoc. of American Railroads, 4 F.R.D. 510 (D.Neb.1945) (rejecting defendant’s motion to dismiss complaint).
. 324 U.S. 439, 65 S.Ct. 716, 89 L.Ed. 1051 (1945).
. Id. at 456-57.
. Pub.L. No. 662, 62 Stat. 472 (1948).
. 49 U.S.C. § 5b (1976). Since the events included in this case occurred, the Reed-Bulwinkle Act has been substantially amended by the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. No. 94-210, 90 Stat. 31 (2d Sess. 1976) and recodified by Pub.L. No. 95-473, 92 Stat. 1466 (2d Sess. 1978). The current version is codified at 49 U.S.C. § 10706 (Supp. V 1981).
. 49 U.S.C. § 5b(2) (1976) (current version at 49 U.S.C. § 10706 (Supp. V 1981)).
. 49 U.S.C. § 5b(9) (1976) (current version at 49 U.S.C. § 10706 (Supp. V 1981)).
. Eastern Railroads — Agreements, 277 I.C.C. 279 (1950).
. The discussions of the rate agreement in the indictment suggest only that its terms were not complied with. See Indictment, ¶ 16 (describing the existence of the rate agreement); ¶ 17 (listing certain provisions of the agreement); and ¶ 23(g) (charging violation of procedures required by the agreement).
. Indictment at ¶ 9; Joint Appendix (JA) at 48.
. Id.
. Id. at ¶ 19, JA at 51.
. Id. at ¶ 10; JA at 48.
. Id at ¶ 11; JA at 48.
. Id. at ¶ 12; JA at 49.
. Id.
. Id. at ¶ 21; JA at 51.
. M. ¶ 22; JA at 52.
. Id. at ¶ 23; JA at 52-53.
. Id.; see TAN 53-65.
. Id.
. 15 U.S.C. § 1 et seq. (1976).
. The procedural history of the case is given at JA 1-4.
. United States v. Baltimore and Ohio Railroad Co., 538 F.Supp. 200 (D.D.C.1982).
. JA 4.
. United States v. Norris, 281 U.S. 619, 622-23, 50 S.Ct. 424, 425, 74 L.Ed. 1076 (1930).
. United States v. Frankfort Distilleries, Inc., 324 U.S. 293, 296, 65 S.Ct. 661, 663, 89 L.Ed. 951 (1945).
. Coleman v. Burnett, 477 F.2d 1187, 1194 n. 20 (D.C.Cir.1973).
. Brief for the United States of America at 21-28.
. See, e.g., United States v. Fitzgerald, 466 F.2d 377, 379 (D.C.Cir.1972).
. See, e.g., Tollett v. Henderson, 411 U.S. 258, 261, 93 S.Ct. 1602, 1605, 36 L.Ed.2d 235 (1973) (defects in grand jury procedure).
. See, e.g., Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970).
. See C. Wright, Federal Practice and Procedure: Criminal 2d § 403 (1982).
. Brief for Appellant at 38-39 n. 41.
. Brief of the Association of American Railroads as Amicus Curiae [hereinafter Amicus Brief] at 40-51.
. Amicus Brief at 51.
. See TAN 29-36.
. United States v. Western Pacific Railroad Co., 352 U.S. 59, 64, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956) (doctrine requires exercise of discretion); Federal Maritime Board v. Isbrandtsen Co., 356 U.S. 481, 498-99, 78 S.Ct. 851, 861-62, 2 L.Ed.2d 926 (1958) (primary jurisdiction only determines whether court or agency will initially decide an issue); United States v. Philadelphia National Bank, 374 U.S. 321, 353, 83 S.Ct. 1715, 1736, 10 L.Ed.2d 915 (1963) (court’s jurisdiction is not ousted, but postponed); Atlantic Coast Line Railroad Co. v. Riss & Co., 267 F.2d 659, 660 (D.C.Cir.), cert. denied, 361 U.S. 804, 80 S.Ct. 108, 4 L.Ed.2d 57 (1959) (primary jurisdiction determination requires “exercise of discretion” of court).
. Cheyney State College Faculty v. Hufstedler, 703 F.2d 732, 736 (3d Cir.1983), quoting 3 K. Davis, Administrative Law Treatise § 19.01 (1958).
. The amicus points to Atlantic Coast Line Railroad v. Riss & Co., 267 F.2d 657 (D.C.Cir. 1958), which requires referral to the agency where the “intent and effect” of a rate reduction is the “sole or dominant issue,” but which does not require referral where the rate reduction is “only one of considerable number of overt acts alleged and where the policy favoring referral is clearly outweighed by other factors such as the probability of undue delay.” Id. at 658.
Because of the nolo plea, Riss is not controlling at this stage of the litigation. In any event, in the case before us the “intent and effect” of the rate filings is only one issue among several. The entry of the nolo plea also resolved all factual issues bearing on the “intent and effect” of the rate reductions, so that referral to the agency at this time could only lead to pointless delay.
. Brief for Appellant at 35-65.
. Id.
. 49 U.S.C. § 5b(9) (1976) (current version at 49 U.S.C. § 10706 (Supp. V 1981)).
. See TAN 4-6.
. 94 Cong.Rec. 6643 (1948) (Sen. Reed — The bill need not expressly exclude agreements that are “unjustly discriminatory as between shippers or geographic regions or areas” because that “is the law now.”); id. at 8415 (Sen. Reed —“[T)here is nothing in the bill that would affect the validity of the Georgia suit in the Supreme Court, and there is nothing in the bill that would affect the antitrust proceedings pending in the court at Lincoln, Nebr.”); id. at A4034 (Rep. Bulwinkle — The bill “does not render moot or defeat the Georgia or Lincoln antitrust suits if the plaintiffs are able to prove the charges alleged.... The issue in the Georgia case is not whether mere participation in the rate conferences by the railroads violates the antitrust laws but whether the railroads have used the rate conferences to fix rates by coercion and to discriminate against Georgia.”).
. H.R.Rep. No. 1100, 80th Cong., 1st Sess. 5 (1947).
. 253 F.2d 877 (D.C.Cir.1958), cert. denied, 361 U.S. 930, 80 S.Ct. 372, 4 L.Ed.2d 354 (1960).
. Id. at 887.
. Reply Brief for Appellant at 27.
. Indictment at ¶ 22; JA at 50.
. Id (describing the specific goals of the conspiracy).
. Id. at ¶ 23(d).
. Brief for United States of America at 42.
. Reply Brief for Appellant at 29.
. The government also argues that “[t]he indictment alleged that the defendants, in furtherance of the conspiracy, gave up ‘the right of independent action with respect to handling charges for iron ore for self-unloaders.’ ” Brief for the United States of America at 40 (emphasis added). The language in the indictment is somewhat less forceful than the government’s brief claims. The indictment only accuses the conspirators of "foregoing the right of independent action.” JA at 53 (emphasis added). This language suggests that the conspirators merely failed to exercise their right of independent action — a failure which by itself does not violate section 5a.
. Indictment at ¶ 23(f).
. 49 U.S.C. § 5b(2) (1976) (current version at 49 U.S.C. § 10706 (Supp. V 1981)).
. Reply Brief for Appellant at 32 n. 41; Brief for Appellant 23 n. 29, 65-66 n. 75.
. 49 U.S.C. § 5b(2) (1976) (current version at 49 U.S.C. § 10706 (Supp. V 1981)).
. Indictment at ¶ 23(h).
. Brief for Appellant at 23 n. 29.
. The actions of the appellant’s co-conspirator in this case are clearly distinguishable from those cases cited by appellant where railroads are permitted to set rates for one service (such as hauling commodities) which disadvantage competitors for another service (such as providing dock services). See Wharfage Charges at Atlantic and Gulf Ports, 157 I.C.C. 663 (1929). They also are, for similar reasons, distinguishable from rate setting which would have disadvantaged the competing truck lines directly by providing the equivalent service at a lower rate.
Here the disadvantage to the truck lines would have come indirectly, through a collusive agreement with the private docks to deny access to the truck lines. Rates would have played a role in the collusive agreement only to the extent' they were employed to enforce the dock’s adherence to the collusion.
