On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Criminal No. 92-00457).
Before: Sloviter, Chief Judge, Scirica and Lewis, Circuit Judges.
Defendant Louis J. Gaev appeals his conviction for conspiring to fix prices in violation of the Sherman Anti-Trust Act, 15 U.S.C. §§ 1-7 (1988). Although Gaev alleges numerous trial errors, we will discuss only one in detail, that the plea agreements of his co-conspirators were improperly admitted into evidence. We will affirm the judgment of conviction and sentence.
On August 12, 1992, Louis J. Gaev was indicted for conspiring to fix prices of new steel drums offered for sale to customers in the eastern United States, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.*fn1 The indictment charged that for a period of at least four years, generally from April, 1986 through March, 1990, Gaev, as Director of National Sales for the Russell-Stanley Corporation, together with co-conspirators, violated the Act by: discussing and agreeing to increase prices on new steel drums to individual customers and to coordinate timing of those price changes; participating in meetings and telephone conversations with co-conspirators to determine prices and terms of sales to individual customers; issuing price quotations in accordance with agreements reached; and concealing conspiratorial contacts through various means, including the use of aliases.
Steel drums are large steel packing containers used to store or transport chemical and petroleum products. They come in different sizes and gauges, with different types of closures, with or without linings, particular finishes and surface designs or logos. A customer orders by designating a code number for a particular set of specifications, which helps suppliers to quote a price. Most customers prefer multiple suppliers over a single supplier to insure an uninterrupted supply, wider choice and more competitive pricing. Most order prices are negotiated, but some are open to competitive bidding.
Russell-Stanley Corporation ("Russell-Stanley"), Van Leer Containers, Inc. ("Van Leer"), and Mid Atlantic Container Corporation ("Mid Atlantic") were the three major suppliers of new 55 gallon steel drums in the eastern region of the United States between 1986 and 1990. During that time, each company announced price increases on steel drums twice a year. The price increases were announced within a few weeks of each other and all were similar or identical in amount and effective date.
Officers of two of the corporations testified at Gaev's trial that they had participated with him in a price-fixing conspiracy. They were Victor Bergwall, General Manager of Sales for Van Leer, William McEntee, President of Mid Atlantic, and Herbert Stickles, Executive Vice President of Mid Atlantic. Their testimony was corroborated by documentary evidence, including telephone records, expense reports, price announcements, and handwritten memoranda.
Victor Bergwall testified that he was unhappy with the price-cutting that prevailed in the industry in the mid-1980's. In 1986, Bergwall and Herbert Stickles discussed the volatility of the steel drum market and decided it would be better to compete on the basis of quality and service rather than price. The two men began calling each other to verify whether their mutual customers were telling the truth when they claimed to one of them that the other would give a better price on a particular drum. These conversations soon turned to Discussions of future prices. Each time a general price increase was announced, Bergwall and Stickles discussed when to put it into effect and how much of it to implement with specific customers.
Bergwall testified that, early in 1986, he commenced similar Discussions with Gaev at Russell-Stanley. Bergwall knew he should not be talking to competitors about pricing, but he wanted to "stabilize the market" and believed that Russell-Stanley, who was the largest supplier, had to be part of the agreement. Bergwall and Gaev discussed customers and locations to which they supplied the same drums. These included their largest accounts. The purpose of these agreements was to stabilize prices and make a "reasonable margin of profit."
Stickles testified that his Discussions with Gaev and Bergwall began after Mid Atlantic's owner, Daniel Milikowsky, told him to call the other two companies for any information that his salesmen might need about prices and to "be receptive to their calls" as well. After Milikowsky told Stickles that "the channels [of communication] had been opened," Stickles called Gaev and Bergwall on a regular basis to ascertain the prices they quoted to mutual customers. After receiving a competitor's price for a particular drum, Mid Atlantic offered its drum at the same price or a slightly higher price (to avoid buyer suspicion). ...