Seitz, Aldisert, Circuit Judges and Higginbotham, District Judge. Aldisert, Circuit Judge, Dissenting in Appeal Numbers 18,183 and 18,187.
These are appeals from judgments of conviction entered after jury verdicts finding violations of section 1 of the Sherman Act, 15 U.S.C. § 1, by appellants American Radiator & Standard Sanitary, Inc. (American Standard); Joseph J. Decker and Daniel J. Quinn, President and Vice President respectively of American Standard's Plumbing and Heating Division; Kohler Co. (Kohler); Norman R. Held, member of Kohler's board of directors and Sales Manager for Plumbing Fixtures; and Borg-Warner Corp. (Borg-Warner).
Appellants were indicted on October 6, 1966. Also indicted with appellants were five other plumbing fixture manufacturers, Crane Company (Crane), Universal-Rundle Corp. (Universal-Rundle), Rheem Manufacturing Co. (Rheem), Wallace-Murray Corp. (Wallace-Murray), and Briggs Manufacturing Company (Briggs); five other employees of corporate defendants, Robert E. Casner, Vice President and General Manager of Crane's Plumbing, Heating, Air Conditioning Group; John B. Balmer, President of Wallace-Murray; Stanley S. Backner, Universal-Rundle's Vice President for Marketing until December 1963, and Executive Vice President of the Plumbing Fixtures Manufacturers Association thereafter; Robert J. Pierson, Jr., Vice-President for Marketing of Rheem's Home Products Division; George W. Kelch, President and General Manager of Borg-Warner's Intersoll-Humphryes Division; and the Plumbing Fixtures Manufacturers Association (PFMA). The one-count indictment charged that from September 1962 until sometime in 1966 the corporate and individual defendants, together with various unindicted co-conspirators, engaged in an unlawful combination and conspiracy consisting of "a continuing agreement, understanding and concert of action . . . to raise, fix, stabilize and maintain the prices of enameled cast iron and vitreous china plumbing fixtures" in violation of section 1 of the Sherman Act. The indictment further stated that:
"13. In formulating and effectuating the aforesaid combination and conspiracy, the defendants and co-conspirators did those things which they combined and conspired to do, including, among other things, the following:
"(a) Held meetings at various times under the guise of so-called 'official' PFMA meetings and during conventions of plumbing fixtures distributors and wholesalers at hotels and clubs, including, among others Greater Pittsburgh Airport Hotel, Pittsburgh, Pennsylvania; Sheraton-Chicago Hotel, Chicago, Illinois; Shoreham Hotel, Washington, D.C.; The Americana of New York, New York, New York; The Waldorf-Astoria, New York, New York; Palm Beach Biltmore Hotel, Palm Beach, Florida; and Chicago Athletic Club, Chicago, Illinois, at which times said defendants and co-conspirators:
"(i) agreed to increase prices of enameled cast iron and vitreous china plumbing fixtures;
"(ii) agreed to limitations on maximum discounts from published prices of enameled cast iron and vitreous china plumbing fixtures;
"(iii) confronted one another with reported deviations from agreed upon maximum discounts and published prices of enameled cast iron and vitreous china plumbing fixtures;
"(iv) agreed to discontinue the manufacture of regular enameled cast iron plumbing fixtures which were lower-priced than acid-resistant enameled cast iron plumbing fixtures; and
"(v) agreed to seek and to obtain, as part of the agreement to discontinue the manufacture of enameled cast iron plumbing fixtures, the revision of the Enameled Cast Iron Commercial Standard to provide for only acid-resistant enameled cast iron plumbing fixtures;
"(b) Published price announcements and price books increasing the prices of enameled cast iron and vitreous china plumbing fixtures in accordance with agreements reached;
"(c) Discontinued the manufacture of regular enameled cast iron plumbing fixtures in accordance with the agreements reached;
"(d) Telephoned and otherwise contacted one another between meetings concerning:
"(i) increased prices on vitreous china plumbing fixtures;
"(ii) reported deviations from agreed upon maximum discounts and published prices of enameled cast iron and vitreous china plumbing fixtures; and
"(iii) the discontinuation of the manufacture of regular enameled cast iron plumbing fixtures;
"(e) Used the office of Secretary of PFMA, among other things, to schedule and arrange for the aforesaid meetings, to maintain a line of communication between said defendants and co-conspirators and to co-ordinate the efforts of said defendants and co-conspirators in seeking and obtaining the revision of the aforesaid Enameled Cast Iron Commercial Standard."
The defendants named in the indictment that are not involved in this appeal entered pleas of nolo contendere in the fall of 1968 and were thereafter sentenced. Appellants entered pleas of not guilty, and their sixteen-week jury trial began on January 13, 1969. Their basic theory was that the price moves alleged to be the result of illegal agreements were in fact the result of the operation of ordinary economic forces in the market place. The government called ten witnesses and rested its case on February 19, 1969. Appellants Quinn, Decker, American-Standard, Held and Kohler presented a total of 21 witnesses and rested their cases on April 23, 1969. Appellant Borg-Warner elected not to introduce any testimony of its own although its counsel did cross-examine witnesses and place some exhibits in evidence. The trial transcript consisted of 10,256 pages and more than 900 exhibits were introduced into evidence. The jury retired to deliberate on the afternoon of May 2, 1969, and at 10 p.m. returned guilty verdicts against all six appellants, and they were thereafter sentenced.
Appellants have filed a Joint Brief in this court advancing numerous grounds in support of their claim that all their convictions should be reversed. They argue that they were denied a fair trial because of the trial judge's excessive and partisan participation in the trial and by his erroneous evidentiary rulings; that they were substantially prejudiced and denied a fair trial by the improper and inflammatory conduct of the prosecuting attorneys; and that they were prejudiced by the trial judge's procedures in connection with the jury charge, errors in the charge, and the pressured submission of the case to the jury. In addition separate briefs have been filed by all appellants but American Standard. Each advances various individual grounds for reversal. Unlike appellants American Standard and Quinn, appellants Kohler, Held, Borg-Warner and Decker argue that because of the weakness of the government's case against them, their motions for judgment of acquittal should have been granted.
We will first deal with the arguments raised in appellants' Joint Brief and then examine those raised in the individual briefs. In order to evaluate the claim of appellants Kohler, Held, Borg-Warner and Decker that the evidence against them was insufficient to go to the jury (and to provide some indication of the strength of the government's case against all of the appellants), we will begin our analysis with a review of some of the government's evidence.
We emphasize at the outset our conclusion that the evidence of an illegal price-fixing conspiracy is compelling. The proof of the conspiracy rests in large part upon the testimony of witnesses who were themselves defendants or executives of defendant corporations. These witnesses described various meetings they attended where price discussions occurred and price fixing agreements were reached. When this multiple "eyewitness" testimony is considered in light of the largely admitted simultaneous price moves made by the indicted manufacturers, the strength of the government's case becomes apparent.
We will discuss in turn the four "phases" of the conspiracy alleged by the government. We note that the government was not required to prove that all the means and methods alleged in the indictment were utilized or that each defendant participated in each phase of the conspiracy or, indeed, that any of the illegal agreements were carried out. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 84 L. Ed. 1129, 60 S. Ct. 811 (1940). A conviction against any defendant is warranted if the jury finds beyond a reasonable doubt that the conspiracy alleged in the indictment existed and that the defendant knowingly became a member of the conspiracy, either at its inception or at a later phase of its operation. Moreover, no formal agreement is necessary to constitute an unlawful conspiracy; it is sufficient that a concert of action be contemplated and the defendants conform to the arrangement. "Where the circumstances are such as to warrant a jury in finding that the conspirators had a unity of purpose or a common design and understanding, or a meeting of the minds in an unlawful arrangement, the conclusion that a conspiracy is established is justified." American Tobacco Co. v. United States, 328 U.S. 781, 810, 90 L. Ed. 1575, 66 S. Ct. 1125 (1946). See also Esco Corp. v. United States, 340 F.2d 1000 (9th Cir. 1965).
October-November 1962 Enameled Cast Iron Bathtub Price Increase
It is undisputed that, with the exception of Borg-Warner, all the indicted corporations published identical increased prices on special truckload and carload "discount prices" on certain high volume enameled cast iron bathtubs in October and November 1962. Although Borg-Warner did not issue a printed sheet, there was evidence that it "published" similar price increases on the bathtubs in question by a series of telephone calls made in October to sales representatives around the country, each of whom communicated the prices to wholesale distributors. We think the evidence would support a jury finding that these bathtub price increases were the direct result of an agreement reached at a meeting of the indicted corporations' sales officials held in appellant Quinn's room at the Sheraton-Chicago Hotel on September 17, 1962, the evening before a regularly scheduled PFMA meeting.
There was evidence that the following persons were present at this September 17 gathering in Quinn's room: appellant Quinn (American Standard), appellant Held (Kohler), defendant Kelch (Borg-Warner), defendant Casner (Crane), defendant Backner (Universal Rundle), Charles J. Callanan, Jr., a Rheem executive and its representative to the PFMA, and J.V. Cannon, Director of Marketing of the Eljer Division of Wallace-Murray. There was substantial "eyewitness" testimony concerning price discussions and agreements at this gathering. For example, the government's first witness, Callanan (Rheem), testified that he attended this September 17 gathering in Quinn's room and that specific prices for bathtubs in question were discussed there. He further testified that when he left the meeting he knew what the price increases would be:
"Q. The question, Mr. Callanan, was: What was decided with respect to the specific increased prices on bathtubs in that room?"
"The Witness: The prices as reflected in my bulletin of November 2, 1962, were the prices that I came out of that room with that understanding."
These prices were the identical prices adopted by all the other indicted manufacturers. Moreover, although Callanan could not recall specific statements by each attendee concerning the bathtub price increase, he did testify that defendant Kelch (Borg-Warner) participated in price discussions and that appellant Held (Kohler) "was there listening" to them.
Cannon (Wallace-Murray) also testified that he was present at the meeting in Quinn's room and that prices for the bathtubs in question were discussed there. He further stated that when he returned to Pittsburgh he reported the price discussions to his superior, Loren H. Bonnett, Vice President and General Manager of Wallace-Murray's Eljer Division and told him he "felt confident there would be a price increase" on the bathtubs in question. Bonnett confirmed that Cannon reported the September 17 price discussions to him:
"Q. To the best of your recollection, Mr. Bonnett, what did Mr. Cannon tell you concerning these increased prices?
"A. To the effect that there was a general discussion, that higher prices were wanted and needed, by everyone, and that there was a tentative agreement to increase prices, tentative discussion. I couldn't say that there was a definite agreement by everyone, but prices were discussed."
In light of this evidence, and considerable other evidence in the record, we think the jury could have found that the October-November 1962 enameled cast iron bathtub price increases were the result of a price fixing conspiracy. As to all appellants*fn1 except Decker (American Standard),*fn2 there was certainly sufficient evidence to go to the jury.
The Agreement to Maintain and to Increase the Prices of Vitreous China Plumbing Fixtures
The second goal of the conspiracy, the government asserted, was to maintain and ultimately to increase prices on vitreous china plumbing fixtures. It is undisputed that on January 14, 1963 Crane announced an approximately 7 per cent increase in published wholesaler net prices for all vitreous china plumbing fixtures and at the same time withdrew certain special discount prices on some high volume items. On January 23, 1963 American Standard increased both its wholesaler net prices and its special discount prices on vitreous china plumbing fixtures by about 7 per cent. Within a month thereafter, all*fn3 the other indicted manufacturers had substantially followed American Standard's new prices, and Crane retroactively reinstituted special discount prices at the same higher level adopted by the other manufacturers. We think there was ample evidence for the jury to find that these price increases were the result of an illegal agreement.
Callanan (Rheem) testified, for example, that at the September 17, 1962 gathering in Quinn's room at the Sheraton-Chicago hotel.*fn4
" . . . there was a discussion with regard to raising the prices of china on the Special Buying Opportunity but it was felt that unless the short-line manufacturers increased their price, we couldn't get too far away from it."
He also related that he concluded at the time that the special discount prices in effect then would be maintained by the group:
"Q. What was decided with respect to the vitreous china staple prices on your Special Buying Opportunity of May 1962, which was the subject of discussion?
"A. My opinion when I left the room was that there would be no change in staple prices in that Special Buying Opportunity special discount price sheet."
Callanan also testified that at the September 17 meeting "there was a feeling that there should be an across-the-board raise of some percentage to strengthen the china prices."
The evidence also indicates that top level representatives of the Enameled Cast Iron Industry Group of the PFMA met at the Shoreham Hotel in Washington, D.C. on November 20, 1962, the day after a special dinner meeting of the Enameled Cast Iron Industry Group in Washington. Robert J. Pierson, Vice President for Marketing of Rheem's Home Products Division, testified that at this November 20 meeting he participated in a discussion regarding some proposed price increases with Quinn (American Standard), Held (Kohler), Kelch (Borg-Warner) and Casner (Crane). He said that Casner told the group his company had instructed him to raise prices and that they were going to certain levels in spite of what the industry might do. Pierson further testified that, at this point:
"There was a general discussion regarding each individual company's reaction to it. It was my opinion when I left that people probably would follow the lead of Crane in some form or another."
We have already pointed out that on January 14, 1963, Crane was the first defendant to announce an across-the-board 7 per cent increase for all china fixtures in its wholesaler net price book and that shortly thereafter all the other indicted corporations followed.
Charles Betz, who at the relevant time was Briggs' Sales Vice President, testified that in January 1963 he had a telephone conversation with Raymond A. Pape, a Crane official, concerning vitreous china prices and told him he "would certainly go along" with a sensible price increase "because these past price practices were very disastrous to our business." Moreover, Betz testified that, when Briggs subsequently increased its china prices, it was because of its competitors' actions and pursuant to his telephone conversation with Pape.
Government witnesses also established that, after the vitreous china increase had been effected by all defendants but Borg-Warner, there remained considerable doubt whether the new prices would remain in force. However, the evidence indicates that at a "special meeting" of the Enameled Cast Iron Industry Group of the PFMA at the Waldorf-Astoria in New York on February 7, 1963 several of the conspirators agreed to try to maintain the new prices. Decker and Quinn (American Standard), Held (Kohler), Kelch (Borg-Warner), Callanan (Rheem), Pape (Crane), Bonnett (Wallace-Murray), and Backner (Universal-Rundle) attended this special meeting. Bonnett testified that after the "formal" part of the meeting there was a "price discussion." He stated that he stayed for only a few minutes and then went to Quinn's room upstairs, and that Quinn told him he would come up later and report whatever transpired. Quinn arrived at 4:00 p.m. and they discussed the price decisions made at the meeting. With respect to the vitreous china price increase, Bonnett testified as follows:
"Q. Did you discuss with Mr. Quinn -- did you tell him what Murray Corporations' intentions were with respect to the recent vitreous china increase?
"A. We had published a new price and when we did, it was our intention to try to adhere to those prices to the best of our ability. So this would have been understood, that we would try to maintain any new prices that we had published.
"Q. Did Mr. Quinn indicate to you at this time, in his hotel room, what the view of the people downstairs were in connection with the recent vitreous china increase?
"A. Well, the general consensus was that the new prices would -- we would try to maintain the new prices."
Five days after Kelch (Borg-Warner) attended this February 7 meeting Borg-Warner also announced a 7 per cent across the board increase on china fixtures.
Thus in the light of the above and other substantial evidence in the record, we think a jury finding that vitreous china prices were fixed as a result of illegal agreements would be plainly justified. The evidence on this point against all appellants, except perhaps Decker, was sufficient to go to the jury.
The Agreement to Limit Maximum Discounts From Wholesaler Net Prices
The third phase of the conspiracy, the government asserted, was an agreement to limit discounts on quotations on project or job work to a maximum of 15 per cent from wholesaler net prices on enameled cast iron fixtures and 20 per cent on china fixtures. We think there was sufficient evidence to justify a jury finding that the defendants illegally agreed to limit maximum discounts in violation of the Sherman Act.
Callanan testified that there was a discussion about job pricing and maximum discounts at the gathering in Quinn's room at the Sheraton-Chicago hotel on September 1, 1962:*fn5
"Q. What was the discussion that evening in Mr. Quinn's room concerning discounts from sheet prices, Mr. Callanan?
"A. I can't remember what the discussion was, but I came away with the opinion that discounts that I would be using would be 15 per cent on iron and 20 per cent on china.
"The Court: That you alone would be doing that?
"A. I don't know what other people were doing.
"The Court: All right. Then, you would do it. You came away with the opinion that only you would be doing what you said you would be doing?
"The Court: That is what we want to know. If it is that, say that.
"A. I was of the opinion that other people would be using the same structure.
"Q. What other people, sir?
"A. The other members who were in the room ...