Antitrust Law Daily Sherman Act conspirator falls short in proving need for new trial
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Tuesday, October 24, 2017

Sherman Act conspirator falls short in proving need for new trial

By Lindsey Firnbach, J.D.

A chief operating officer of a freight carrying company failed to demonstrate that the government’s failure to disclose a qui tam False Claims action required the granting of a new trial, according to the U.S. Court of Appeals in Boston. The officer, who had been convicted of violating the Sherman Act, appealed his conviction after the qui tam action had been filed, arguing that the non-disclosure violated his due process rights, and a new trial was warranted. The court, however, believed that there was not any prejudicial effect from the non-disclosure, and it upheld the lower court decision which held that this disclosure would not have changed the outcome of the original hearing (U.S. v. Peake, October 23, 2017, Dominguez, D).

The officer was originally charged with violating the Sherman Act in 2011 for his role in fixing rates and surcharges of cargo that was transported to Puerto Rico. The government presented witness testimony, emails, travel records, and phone records linking the officer to the crime, and he was found guilty and sentenced to 60 months in prison. After the conclusion of the trial, a former executive of one of the fright companies, filed a qui tam False Claims Act claim. The officer filed a motion for a new trial, stating that the government failed to notify him of this cause of action and this, in turn, caused a violation of his due process rights, guaranteed by Brady v. Maryland, 373 U.S. 83 (1963). He further argued that the outcome of the trial would had been different if he had knowledge of this claim.

The district court reviewed the evidence and denied the motion, arguing that there was no reason to believe that an earlier disclosure of this claim would have changed the officer’s case. The officer appealed this decision, arguing that a new trial should be granted due to failure to disclose, as well as the fact that new law suggests that Puerto Rico would not be considered a state under the Sherman Act.

Failure to disclose. A motion for a new trial on the grounds of a Brady violation requires that the appellant demonstrate that the new evidence was unknown at the time of the trial, the appellant’s lack of awareness of this evidence was not due to any diligence on his part, and that there is a reasonable chance that if the evidence had been disclosed, the result of the trial would have been different. The officer claimed that knowledge of this action would have allowed him to present three points not presented at his original trial, that he would have been able to bring impeachment evidence against the former executive and another witness, and that he would have been able to transfer the case to a different venue. The court dismissed all of these claims arguing that the three points had no connection with the qui tam action and were not controversial. The court did not believe that the officer demonstrated that this claim would have made him re-evaluate his case, and any impeachment evidence that could have been brought would have been minor to this case in light of the vast evidence presented by the government. In regards to venue change, the court noted that this was the first time this claim was presented to the court, which was not proper for it to be first presented on appeal. Even if it was proper, a change of venue would be inconsequential to his guilt, and new information regarding only a venue decision would not be a Brady violation.

Status claim. The officer also argued that a violation of the Sherman Act requires a conspiracy among the several states, and recent case law had caused questions as to whether Puerto Rico could be considered a state for purposes of the Sherman Act. Due to this potential status issue, he argued that a new trial should be granted. The court rejected this argument, stating that the motion presented by the officer required that a new trial be granted due to newly discovered evidence, not a change in law. Even so, it was presented at trial that the conspiracy involved commerce in more than just a state and Puerto Rico.

The case is No. 16-2356.

Attorneys: Mariana E. Bauza Almonte, US Attorney's Office, for the United States. David Oscar Markus (Markus & Markus PLLC) for Frank Peake.

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