political candidates to affix attribution clauses to campaign materials. The defendant in that case was charged with failing to have done so with respect to bumper stickers. The indictment was dismissed on the ground that the statute was inartfully drawn and did not give fair warning that the conduct was illegal. This lack of fair warning was increased by the fact that there had been no prosecutions for the practice for 29 years and that the lack of attribution clauses on bumper stickers was "a universally accepted omissive practice among federal candidates." United States v. Insco, 496 F.2d at 209.
The conspiracy and mail fraud statutes involved in this case, however, are not subject to the same attacks. While the Defendants' reliance on advice and what they thought other contractors were doing would have been probative on the issue of good faith, no such evidence was offered. In addition, there was no evidence that the Postal Service affirmatively misled the Defendants into believing that they could engage in the conduct disclosed by the evidence which included the use of a shell corporation to generate marked up invoices and then affirmatively to mislead the Postal Service as to the relationship between LaBar Transportation and Petroleum Suppliers.
In their reply brief the Defendants request a hearing to show that their reliance on alleged Postal Services practices was reasonable and a ground to prevent their prosecution. A hearing at this stage of the proceedings is not appropriate. The Court rejects the Defendants' attempt to divorce this issue from those that were the proper subject of the jury's determination and to have the Court now hear their defense. Stripped to its core, the Defendants' argument is that they believed what they were doing was legal. Evidence on that issue could properly have been presented to the jury but the Defendants chose not to do so.
United States v. Insco is not to the contrary. While it is true that in Insco the Court of Appeals dismissed the indictment for the reasons stated above, it observed that the case involved "extraordinary facts, unlikely of repetition in other contexts...." United States v. Insco, 496 F.2d at 209. The Defendants have failed to show that this case presents factual circumstances so similar to Insco as to warrant the dismissal of the indictment.
The Defendants next argue that the convictions must be set aside because they are offensive to the due process clause of the Fifth Amendment since the regulations upon which the Government's case was based failed to give the Defendants fair warning of what was prohibited and placed unbridled discretion in the hands of law enforcement officials. It is the Defendants' position that the postal regulations involved in this case permitted fuel price increases only if they were attributable to external forces over which the contractor had "little, if any control." Postal Contracting Manual, § 19-316.21, Government Exhibit 1.01, or from "economic conditions" over which the contractor had "little or no control." Regional Instructions, Part 500 Transportation, 1008-T-164 Filing No. 523, Sept. 27, 1977, § IIB, Government Exhibit 1.02. It is the Defendants' contention that the Government's fraud theory is that the Defendants falsely and fraudulently represented to the Government that the fuel price increases were proper under postal regulations and that the increased prices were brought about by circumstances over which LaBar Transportation had "little, if any control" or "little or no control." Defendants argue from this that the phrases "little, if any control" and "little or no control" are too vague to provide the Defendants with notice of what degree of control over prices they could properly exercise.
The Government takes the position that even if the applicable postal regulations are vague, the Defendants can still properly be convicted of conspiracy and mail fraud because the elements of those offenses in the context of this case did not require proof that Postal Service regulations were violated. The Government's position is that the jury could have found that the Defendants acted in a manner "reasonably calculated to deceive persons of ordinary intelligence and comprehension." United States v. Pearlstein, 576 F.2d 531, 535 (3d Cir. 1978).
The Court finds the Government's attempt to divorce this prosecution from the postal regulations to be unpersuasive. The Court in its opinion denying the Defendants' pre-trial motion to dismiss the indictment on this ground stated at that time that the indictment charged conspiracy and mail fraud and did not charge the Defendants with violating Postal Service regulations. United States v. LaBar, 506 F. Supp. at 1274. At that time, the Court, of course, could not know the manner in which the Government would attempt to prove its case against the Defendants. Now that the trial has been completed, the Court agrees with the Defendants' contention that the phrases "little or no control" and "little, if any control" are crucial to the Government's case. The Government's entire theory of the case was that the Defendants sought fuel cost increases to which LaBar Transportation was not entitled under applicable regulations.
Having concluded that the postal regulations relating to price increases were crucial to the Government's case, the Court will confront the Defendant's vagueness argument. In a case such as this that involves no First Amendment freedoms, the Defendants' vagueness challenge must be determined in the light of the facts of the case. United States v. Powell, 423 U.S. 87, 92, 96 S. Ct. 316, 319, 46 L. Ed. 2d 228 (1975). A statute regulating commercial activity is unconstitutionally vague if it "proscribes no comprehensible course of conduct at all." United States v. Powell, 423 U.S. at 92, 96 S. Ct. at 319.
Such a statute was in issue in United States v. Cohen Grocery Co., 255 U.S. 81, 89, 41 S. Ct. 298, 300, 65 L. Ed. 516 (1921). That statute prohibited anyone from "willfully ... make(ing) any unjust or unreasonable rate or charge in ... dealing in or with any necessaries..." In explaining the Court's finding of unconstitutionality in the Cohen case, the Supreme Court in Powell explained that:
(t)he sugar dealer in Cohen ... could have had no idea in advance what an "unreasonable rate" would be because that would have been determined by the vagaries of supply and demand, factors over which he had no control.