United States v. Kemp & Associates , 907 F.3d 1264 ( 2018 )

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS October 31, 2018
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
UNITED STATES OF AMERICA,
Plaintiff - Appellant.
v. No. 17-4148
KEMP & ASSOCIATES, INC.; DANIEL
J. MANNIX,
Defendants - Appellees.
_________________________________
Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:16-CR-00403-DS-1)
_________________________________
Andrew C. Finch, Principal Deputy Assistant Attorney General, Antitrust Division
(Makan Delrahim, Assistant Attorney General, Marvin N. Price Jr., Acting Deputy
Assistant Attorney General, Kalina M. Tulley, Robert M. Jacobs, Ruben Martinez, Jr.,
Molly A. Kelley, Kristen C. Limarzi, James J. Fredricks, Adam D. Chandler, Jonathan H.
Lasken, Attorneys, with him on the briefs), Department of Justice, Washington, DC,
appearing for appellant.
James A. Mitchell (Mark R. Gaylord, Jason D. Boren, Ballard Spahr LLP, Salt Lake City,
Utah, and Michael J. Grudberg, Tarter Krinsky & Drogin LLP, New York, New York,
with him on the briefs), Ballard Spahr LLP, New York, New York appearing for appellee
Kemp & Associates, Inc.
Richard F. Albert (Devin M. Cain with him on the briefs), Morvillo Abramowitz Grand
Iason & Anello, P.C., New York, New York appearing for appellee Daniel J. Mannix.
_________________________________
Before PHILLIPS, EBEL, and MORITZ, Circuit Judges.
_________________________________
EBEL, Circuit Judge.
_________________________________
It is axiomatic that federal courts are courts of limited jurisdiction. See, e.g.,
Dutcher v. Matheson, 733 F.3d 980, 984 (10th Cir. 2013). Bounded first by the
strictures of Article III and further by the limits of statutory jurisdiction given to us
by Congress, we are powerless to rule on even meritorious questions that lie beyond
our purview.
This appeal presents a clean lesson in the import of such jurisdictional
restraint. Of the two questions presented for our review, the first—whether the
district court correctly dismissed the criminal indictment at issue as falling outside
the applicable statute of limitations—lies cleanly within our jurisdiction granted by
18 U.S.C. § 3731. The second, however, is more complex. That question—whether
the district court erred in ruling that the criminal antitrust trial contemplated by this
indictment would proceed according to a rule of reason analysis rather than under the
per se rule—does not fall within § 3731, which closely guards the circumstances
under which the government may appeal a district court’s rulings in a criminal case.
Therefore, while we hold that the indictment here was timely, we also find that
we do not have jurisdiction over the district court’s rule of reason order, and that
mandamus is inappropriate in this circumstance. Therefore we REVERSE the district
court’s dismissal of the indictment, DISMISS the government’s appeal from the rule
2
of reason order for lack of appellate jurisdiction and REMAND for further
proceedings consistent with this opinion.
I. BACKGROUND
In reviewing the district court’s decision to dismiss the indictment on statute
of limitations grounds, “[w]e test the indictment solely on the basis of the allegations
made on its face, and such allegations are to be taken as true.” United States v.
Reitmeyer, 356 F.3d 1313, 1316–17 (10th Cir. 2004) (internal quotation omitted).
On August 17, 2016, a federal grand jury in Utah returned a single count
indictment against Kemp & Associates, Inc. (“Kemp”) and its Vice President/COO
Daniel Mannix (collectively, “Defendants”) for knowingly entering into a
combination and conspiracy in violation of the Sherman Act. Aplt. App. 16–21
(“Indictment”) ¶¶1, 2, 8–10. Kemp is an “Heir Location Service,” a term used to
describe companies that “identify heirs to estates of intestate decedents and, in
exchange for a contingency fee, develop evidence and prove heirs’ claims to an
inheritance in probate court.” Id. ¶ 6.
While many intestate estates become the subject of only a single Heir Location
Service inquiry, sometimes more than one Heir Location Service begins searching for
the same heirs. In such cases, it is possible that a single potential heir will be
contacted by, and receive offers from, more than one competing Heir Location
Service. When that happens, the services may “distinguish their offers from those of
competitors by offering more attractive contingency fee rates.” Id. ¶ 7. In this way,
while a niche community, the Heir Location Services industry operates just like any
3
other. When a single firm is vying for a potential client’s business, the bounds of its
offer are determined only by the price the customer is willing to pay for the service.
But where more than one firm seeks a single client’s business, then supply, in
addition to demand, influences the price ultimately paid by the customer.
In this criminal case the Government alleges that at some point before January
29, 2014, Defendants “knowingly entered into and engaged in a combination and
conspiracy with Richard A. Blake, Jr., [a competitor Heir Location Service] and other
unindicted co-conspirators to suppress and eliminate competition by agreeing to
allocate customers of Heir Location Services sold in the United States.” Id. ¶ 9.
Under this agreement, when the two companies both contacted a potential heir, “the
co-conspirator company that first contacted that heir would be allocated certain
remaining heirs to that estate who had yet to sign a contract with an Heir Location
Services provider.” Id. ¶ 12(b). In return, the company to which heirs were allocated
“would pay to the other co-conspirator company a portion of the contingency fees
ultimately collected from those allocated heirs.” Id. ¶ 11(c). The Government
alleges that, in furtherance of this scheme, Defendants “made payments to the co-
conspirator company, and received payments from the co-conspirator company, in
order to effectuate this agreement.” Id. ¶ 11(f). Based on an email from Mannix to
other Kemp employees, Defendants claim that any “formal” agreement between the
alleged co-conspirators ended sometime before July 30, 2008. Aplt. App. at 219.
In front of the district court, Defendants moved for an order that the antitrust
case would proceed pursuant to the rule of reason, as opposed to the per se rule, and
4
to dismiss the indictment. As to the former, the Defendants acknowledged that
customer allocation agreements are generally analyzed under the per se rule, but
nonetheless they argued that “in the atypical context of the heir location business the
[agreement] is far from an ordinary customer allocation, and instead bears more in
common with joint ventures analyzed under the rule of reason[.]” Id. at 167.
As to the statute of limitations, Defendants noted that the limitations period for
criminal violations of the Sherman Act is five years, and they argued that the
indictment was thus untimely because any agreement between the alleged co-
conspirators ended prior to Mannix’s email in July of 2008, whereas the charging
Indictment wasn’t returned until August 17, 2016, and served on defendants on
September 1, 2016. Defendants did acknowledge, however, that “for some of the
estates subject to the [agreement], certain administration work continued into the
five-year period prior to the Indictment, including the recovery of money for heirs,
and the payment of the firms themselves.” Aplt. App. at 194. Mr. Mannix’s counsel
echoed this language at oral argument, and went even further to note that the two
firms made payments to each other as contemplated by the agreement within the
statutory period.
The district court held a hearing on the two motions, and at the conclusion
orally granted Defendants’ motion for the case to be subject to the rule of reason.
The Government subsequently filed a motion to reconsider, as well as a request for a
ruling on the motion to dismiss. After that motion was fully briefed, the court issued
the rulings relevant on appeal.
5
First, the district court adopted without edit Defendants’ proposed order
regarding the rule of reason. Aplt. App. at 133–36 (“the rule of reason order”). The
court also simultaneously issued a longer memorandum decision and order that
briefly referenced its rule of reason order, but primarily granted Defendants’ motion
to dismiss on the grounds that the alleged agreement ended in 2008, and so the 2016
indictment fell outside the five-year limitations window. Aplt. App. at 137–43
(“Dist. Ct. Order”) at 3.
The Government timely appealed both orders. Recognizing that our appellate
jurisdiction was questionable as to the rule of reason order, the government asked
that if we determine we do not have appellate jurisdiction over that order that we
“treat the relevant parts of [its] brief as a petition for a writ of mandamus.” Aplt. Br.
at 12.
II. DISCUSSION
A. Statute of Limitations
We turn first to the district court’s order dismissing the indictment as barred
by the statute of limitations.
The single charge in this indictment, charging a violation of 15 U.S.C. § 1, is
subject to a five-year statute of limitations. See 18 U.S.C. § 3282(a); United States v.
Evans & Assocs. Const. Co., 839 F.2d 656, 661 (10th Cir. 1988). A Sherman Act
conspiracy, such as the one alleged here, remains actionable “until its purpose has
been achieved or abandoned, and the statute of limitations does not run so long as the
co-conspirators engage in overt acts designed to accomplish its objectives.” United
6
States v. Inryco, Inc., 642 F.2d 290, 293 (9th Cir. 1981) (citing United States v.
Kissel, 218 U.S. 601, 607 (1910)). By way of example, if several construction
companies unlawfully conspire to rig the bidding process on a series of construction
projects, the conspiracy does not end when the last bid is submitted. Instead the
statute of limitations is tolled as long as the firm that ultimately received the rigged
bid receives payments on the unlawfully obtained contract. Evans, 839 F.2d at 661.
The “crucial question . . . is the scope of the conspiratorial agreement, for it is that
which determines both the duration of the conspiracy, and whether the act relied on
as an overt act may properly be regarded as in furtherance of the conspiracy.”
Grunewald v. United States, 353 U.S. 391, 397 (1957).
When reviewing the scope of the conspiracy at the Motion to Dismiss stage we
are bound by the language of the indictment. United States v. Qayyum, 451 F.3d
1214, 1218 (10th Cir. 2006). “We test the indictment solely on the basis of the
allegations made on its face, and such allegations are to be taken as true.” Id.(quoting United States v. Reitmeyer, 356 F.3d 1313, 1316–17 (10th Cir. 2014)). We
review de novo both the district court’s determination as to the scope of the alleged
conspiracy, and its decision to grant the Motion to Dismiss based on the statute of
limitations. See id., 451 F.3d at 1218 (internal citations omitted).
The operative question here, then, is whether, on the face of the indictment we
can conclude that no overt acts in furtherance of the scope of the alleged conspiracy
7
occurred after August 17, 2011.1 In granting the Motion to Dismiss, the district court
concluded that the purpose of the alleged conspiracy ended in 2008 “when the
[agreement was] terminated and all that remained were administrative issues related
to resolving the estates and payments resulting therefrom.” Dist. Ct. Order at 4. In
reaching this conclusion, the court relied on language from the indictment stating the
purpose of the conspiracy was “to suppress and eliminate competition by agreeing to
allocate customers of Heir Location Services sold in the United States.” Id. (quoting
the Indictment ¶ 9). In the district court’s eyes, this meant that “any conspiratorial
agreement ceased to exist once the allocation of customers through the [agreement]
ceased.” Id. at 4.
In so holding, the district court rejected the Government’s argument that one
object of the conspiracy was “economic enrichment.” Id. at 5. This theory,
according to the court, “confuses the results of a conspiracy with the actual conduct
in furtherance of it[,]” id., and if adopted would extend the statute of limitations
“indefinitely[,] beyond the period when the unique threats to society posed by a
conspiracy are present.” Id. (quoting United States v. Doherty, 867 F.2d 47, 62 (1st
Cir. 1989)).
We do not agree, however, that the indictment precludes the argument that
economic enrichment was an object of the agreement. The obvious reason that two
firms would suppress and eliminate competition by agreeing to allocate customers
would be to reap the economic benefits of such efficiency. See Indictment ¶ 9. The
1
Five years prior to the indictment’s date of August 17, 2016.
8
alleged customer allocation was not an end unto itself, but rather a means to reducing
overhead and increasing profit, particularly by giving the conspirators power to
charge higher contingency fees unhindered by the competition that allegedly ensues
when two Heir Location Services firms contact the same heir. See id. ¶ 7.
Despite Defendants’ assertions to the contrary, Evans controls the outcome of
this appeal. In holding that the conspiracy there continued so long as the firms
received payments on the unlawfully obtained contracts, we adopted the Eighth
Circuit’s holding that a “Sherman Act violation [is] ‘accomplished both by the
submission of noncompetitive bids, and by the request for and receipt of payments at
anti-competitive levels.’” Evans, 839 F.2d at 661 (quoting United States v. N.
Improvement Co., 814 F.2d 540, 543 n.2 (8th Cir. 1987)).
That is exactly what the indictment alleges occurred here. Just as multiple
companies in Evans decided which would receive a government contract, here the co-
conspirators allegedly decided which would receive the business of unallocated heirs.
And similarly to how the conspiracy in Evans continued so long as the “winner” of
the rigged contract received payments on that contract, so too did the alleged
conspiracy continue here so long as the co-conspirators were receiving and
distributing contingency fees among the conspirators on the allocated estates.
Because Defendants acknowledge that “ordinary, lawful payments made and
9
administrative tasks undertaken as a result of a prior agreement” occurred within the
limitations window, the indictment was not time-barred. See Aple. Br. at 23.2
Defendants’ attempts to distinguish Evans are unpersuasive. Their position
amounts to the ipse dixit that while the “central objective” of the agreement in Evans
was the distribution of the proceeds earned from the rigged contract, “the ‘societal
danger’ targeted by the Indictment [here] was the ‘suppress[ion] and eliminat[ion]
[of] competition by agreeing to allocate customers of Heir Location Services.” Aple.
Br. at 24–25 (quoting Indictment ¶ 9). The missing link in this syllogism is that this
elimination of competition allows for the Defendants to charge higher contingency
fees unencumbered by a competitive bidding process.
Furthermore, the Indictment alleges on its face that as part of the unlawful
agreement the companies agreed “that the co-conspirator company to which heirs
were allocated would pay to the other co-conspirator company a portion of the
contingency fees ultimately collected from those allocated heirs.” Indictment ¶
11(c). The Indictment further alleges that these payments between the companies
actually occurred. Id. ¶ 11(f).
When the two firms distributed money amongst each other pursuant to the
terms of the alleged agreement after 2011, they committed overt acts in furtherance
2
Both the district court and Defendants explain how holding this indictment
time-barred accomplishes the purposes of the statute of limitations because of the
amount of time it can take to unwind an estate and disburse its assets. Dist. Ct. Order
at 6; Aple. Br. at 16–17, 27–28. Perhaps this is correct as a policy matter, although
we take no position on that question, but it does nothing to distinguish the on-point
authority offered by Evans.
10
of the alleged conspiracy within the limitations period. Regardless of how narrow
one wants to define the scope of the alleged conspiracy, that scope would certainly
include the distribution of funds acquired by one firm pursuant to a non-competitive
process and distributed to the other in exchange for not having submitted a bid for the
estate in question.
Accordingly, the August 17, 2016, indictment was not barred by the statute of
limitations. The district court order dismissing the Indictment on statute of
limitations grounds is REVERSED.
B. Jurisdiction over the Rule-of-Reason Order
We next turn to the district court’s rule of reason order. While the text of the
Sherman Act could perhaps be interpreted to proscribe all contracts, the Supreme
Court has “repeated time and again that § 1 ‘outlaw[s] only unreasonable restraints’”
of trade. Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 885
(2007). In general, we assess whether a given restraint is unreasonable using the
“rule of reason.” Id. “Under this rule, the factfinder weighs all of the circumstances
of a case in deciding whether a restrictive practice should be prohibited as imposing
an unreasonable restraint on competition.” Continental T.V., Inc. v. GTE Sylvania
Inc., 433 U.S. 36, 49 (1977). In particular, under the rule of reason, the defendant is
permitted to introduce any evidence of the alleged restraint’s salutary effect on
competition and commerce. State Oil Co. v. Khan, 522 U.S. 3, 10 (1997).
Notwithstanding this general rule, there are “certain agreements or practices
which because of their pernicious effect on competition and lack of any redeeming
11
virtue are conclusively presumed to be unreasonable and therefore illegal without
elaborate inquiry as to the precise harm they have caused or the business excuse for
their use.” Northern Pac. Ry. Co., v. United States, 356 U.S. 1, 5 (1958). This
approach is known as the “per se” approach. “Under a per se rule, [the government]
prevail[s] simply by proving that a particular contract or business arrangement . . .
exists; no further market analysis is necessary, and defendants may not present any
defenses.” In re: Cox Enters., Inc., 871 F.3d 1093, 1097 (10th Cir. 2017). The per se
rule is not a different cause of action than the rule of reason, but rather only an
evidentiary shortcut through the rule of reason morass. Arizona v. Maricopa Cty.
Med. Soc’y., 457 U.S. 332, 344 (1982). It reflects the recognition that some
practices will nearly always invite condemnation under the rule of reason, and in
those cases the per se rule is appropriate because “for the sake of business certainty
and litigation efficiency we . . . tolerate[] the invalidation of some agreements that a
fullblown inquiry might have proved to be reasonable.” Id.“Per se liability is reserved for only those agreements that are ‘so plainly
anticompetitive that no elaborate study of the industry is needed to establish their
illegality.’” Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006) (quoting Nat. Soc. of Prof.
Eng’rs v. United States, 435 U.S. 679, 692 (1978)). The Supreme Court has further
clarified that “[i]t is only after considerable experience with certain business
relationships that courts classify them as per se violations of the Sherman Act.”
United States v. Topco Assocs., Inc., 405 U.S. 596, 607–08 (1972). But in assessing
whether the judicial system has enough “experience” to determine the
12
anticompetitive effects of an action we focus on the particular practice involved,
rather than the industry in which the allegedly unlawful practice was used. See
Maricopa Cty. Med. Soc’y, 457 U.S. at 351 (“[T]he argument that the per se rule
must be rejustified for every industry that has not been subject to significant antitrust
litigation ignores the rationale for per se rules, which in part is to avoid the necessity
for an incredibly complicated and prolonged economic investigation into the entire
history of the industry involved, as well as related industries, in an effort to
determine at large whether a particular restraint has been unreasonable[.]”) (internal
quotations omitted).
It is undisputed that “an agreement to allocate or divide customers between
competitors within the same horizontal market, constitutes a per se violation of § 1 of
the Sherman Act.” United States v. Suntar Roofing, Inc., 897 F.2d 469, 473 (10th
Cir. 1990); see also Topco, 405 U.S. at 608 (“One of the classic examples of a per se
violation of § 1 is an agreement between competitors . . . to allocate territories in
order to minimize competition.”). The Indictment describes the conduct at issue to
do just that: a conspiracy “to suppress and eliminate competition by agreeing to
allocate customers of Heir Location Services sold in the United States.” Indictment ¶
9.
The district court here concluded that, notwithstanding the labels used by the
government in the Indictment, the per se rule did not apply to the conduct alleged in
this case. The court based its ruling on the facts that the alleged agreement was (1)
“structured in an unusual way,” (2) “affected a small number of estates,” and (3)
13
“occurred in a relatively obscure industry (heir location services) with an unusual
manner of operation.” Aplt. App. at 135. Ultimately, the court concluded that
because the agreement applied “only where two firms had already invested
significant resources investigating the same estate,” and “provided for firms to
integrate their efforts going forward, specifically in administering the probate process
of the estate, which needed to be done only once,” the agreement “on [its] face would
not necessarily restrict competition or decrease output, but instead contained
efficiency-enhancing potential.” Id. at 135. The Government contends this was error
under our precedents, specifically Suntar, 897 F.2d at 476 and Topco, 405 U.S. 601.
Before we can assess this issue, however, we must first satisfy ourselves that
we have appellate jurisdiction to review this order. In criminal cases, the government
is denied the right of appeal absent express statutory authority to do so, United States
v. Hines, 419 F.2d 173, 174 (10th Cir. 1969), and under current law the full extent of
the government’s statutory authority is measured by 18 U.S.C. § 3731, United States
v. Forcellati, 610 F.2d 25, 28 (1st Cir. 1979).
Relevant to this case, that section authorizes the government to appeal “from a
decision, judgment, or order of a district court dismissing an indictment or
information or granting a new trial after verdict or judgment . . . except that no
appeal shall lie where the double jeopardy clause of the United States Constitution
prohibits further prosecution.” 18 U.S.C. § 3731.3 The statute further provides that
3
While not relevant to this appeal, the government is also authorized to appeal
from an order “suppressing or excluding evidence or requiring the return of seized
14
“the provisions of this section shall be liberally construed to effectuate its purposes.”
Id.With an eye toward liberal construction, we have held that some orders having
the practical effect of dismissing an indictment, even if they do not formally do so,
are appealable pursuant to § 3731. See, e.g., United States v. Bergman, 746 F.3d
1128, 1131 (10th Cir. 2014) (“[D]istrict court actions and orders, bearing the
practical effect of dismissing an indictment are subject to appeal under § 3731 even if
they do not formally ‘dismiss’ an indictment or happen to be labeled that way.”).
The Government argues this is such a case. We are not so persuaded.
The key difference between Bergman and the present case is in the
conclusiveness of the connection between the relevant orders and the “practical
effect” of dismissal. In Bergman, the order appealed was one “denying a new trial
date” after the government’s previous conviction of a defendant had been reversed.
746 F.3d at 1130. In construing this order refusing to set a new trial date as akin to a
dismissal, we read the order as a dismissal—after all the district court had declared
that the matter “shall remain closed.” In effect, the court, in its order, had foreclosed
the possibility of a new trial.
In the case before us, the sole charge in the Indictment, a criminal conspiracy
in violation of § 1 of the Sherman Act, remains actionable and immediately triable
following the district court’s order. Unlike in Bergman, the Government here may
property[,]”an order adjusting the confinement status of a person charged with, or
convicted of, a crime, 18 U.S.C. § 3731, and from the imposition of a sentence, 18
U.S.C. § 3742(b).
15
have the case set for trial. The only effect of the order is to foreclose the
Government’s preferred avenue for trying the case, instead requiring the Government
to prove its case under the rule of reason. This preference, even when strongly held,
does not rise to the level of being “tantamount” to dismissal in the same way the
order in Bergman foreclosed the possibility of ever presenting the charges to a jury.
See Bergman, 746 F.3d at 1131.
Practically, the Government’s preference to proceed under a per se rule is not
just strongly held, it is a matter of institutional decree. The current version of the
United States Attorney’s Antitrust Manual states that “current [Antitrust] Division
policy is to proceed by criminal investigation and prosecution in cases involving
horizontal, per se unlawful agreements[.]” U.S. Dep’t of Justice, Antitrust Div.,
Antitrust Division Manual, at III-12 (5th Ed. 2018). And the Government indicated
before the district court that “[t]he United States has long eschewed prosecuting
conduct subject to the rule of reason, and it has no interest in doing so here.” Aplt.
App. at 249.
But, as the Government itself acknowledges, that is simply a matter of
prosecutorial discretion. That the Government avers it will not proceed with an
action given a preliminary order about how the case may proceed—regardless how
sincere that averment is—does not mean dismissal is a “necessary result” of the
targeted order. See Carroll v. United States, 354 U.S. 394, 405 (1957).4 Here there
4
Carroll dealt with an adverse suppression ruling. Today, unlike in 1957,
adverse suppression rulings are specifically appealable. See 18 U.S.C. § 3731.
16
is nothing stopping the government from proceeding to trial beyond the exercise of
its institutional discretion.
United States v. Lavallee, 61 F. App’x 631, 632 (10th Cir. 2003) (per curiam)
(unpublished) is persuasive, although admittedly not controlling. There the
government moved for a continuance so that its “primary witness” would have the
opportunity to “physically recover enough to testify.” Id. After the district court
denied the continuance, a panel of this court denied the interlocutory appeal,
reasoning that the district court’s order did not have the “practical effect” of
excluding the witness’s testimony because “it was not the district court who
precluded the witness from testifying. Instead, outside circumstances prevented the
witness from attending trial or completing his deposition, and the district court
simply refus[ed] to delay the trial.” Id. Similarly, here, the district court’s order did
not have the necessary and equivalent effect of dismissing the indictment, but rather
it simply placed the Government in a scenario in which it would prefer not to litigate.
That is not tantamount to dismissal under the Bergman rule. See also United States
v. Stipe, 653 F.2d 446, 449–50 (10th Cir. 1981) (holding government could not
appeal district court’s ruling on order of proof even though government averred the
ruling prejudiced its ability to prove its case at trial).
The Government’s last volley is that its allegation of a per se violation is a
“discrete theory of liability,” and that the dismissal of such a theory is appealable
under § 3731. Aplt. Br. at 50; Reply Br. 29–30. But as the Supreme Court has noted,
“per se and rule-of-reason analysis are but two methods of determining whether a
17
restraint is ‘unreasonable,’ i.e., whether its anticompetitive effects outweigh its
procompetitive effects.” Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328,
342 (1990). They could not have been charged as separate counts even if the
government had been so inclined.5 This alone thwarts the government’s bid to
establish jurisdiction based on United States v. Schneider, 594 F.3d 1219, 1226 (10th
Cir. 2010).6
We are sympathetic to the Government’s position. Based on its longstanding
practice of not pursuing criminal antitrust prosecutions under a rule of reason
analysis, this order may have the practical effect of dismissing this case unless the
government chooses to depart from its position of declining to prosecute this release
under a rule of reason approach.
But government appeals of interlocutory orders in criminal cases often tread
into thorny constitutional areas. For this reason one leading treatise cautions that
interlocutory appeals from non-final decisions “will remain rare in light of the
generally strict enforcement of the perception that the policies of finality weigh with
5
The Government argues that this “could have been charged separately” rule
is not the test, relying on a case from the First Circuit. Reply Br. at 29–30 (citing
United States v. Levasseur, 846 F.2d 786, 790 (1st Cir. 1988)). But the Government
does not cite, nor were we able to find, a single case where the Supreme Court or the
Tenth Circuit has accepted jurisdiction over an order dismissing conduct that was
not, nor could have been, charged separately.
6
United States v. Terry, 5 F.3d 874 (5th Cir. 1993) is persuasive. There the
district court struck from the indictment two alleged “overt acts” the government
planned to use to establish conspiracy. 5 F.3d at 875–76. Our sister circuit
concluded that even though this ruling hindered the government’s methods of proof
at trial, it did not fall within the confines of appealable orders established by 18
U.S.C. § 3731. Terry, 5 F.3d at 876.
18
special force against allowing interlocutory appeals by the government in criminal
cases.” 15B Charles Alan Wright, Arthur P. Miller & Edward H. Cooper, Fed. Prac.
& Proc. § 3919.4, at 636–37 (2d ed. 2018).
Accordingly, we hold that the district court’s rule of reason order does not fall
within our interlocutory appellate jurisdiction to review.
C. Mandamus over the Rule of Reason Order
Cognizant that we might so hold, the Government asks us to interpret its brief,
in the alternative, as a petition for a writ of mandamus. At the outset we note that a
writ of mandamus is an “extraordinary remedy,” and is “not a substitute for an
appeal.” In re Cooper Tire & Rubber Co., 568 F.3d 1180, 1186 (10th Cir. 2009). In
recognition of these principles, “we will grant a writ only when the district court has
‘acted wholly without jurisdiction or so clearly abused its discretion as to constitute a
usurpation of power.’” Id. (quoting United States v. Carrigan, 804 F.2d 599, 602
(10th Cir. 1986)). In determining whether the writ should issue, we have alternated
between two similar but distinct frameworks for analysis. The first involves
analyzing three “conditions.” Id. at 1187. First, “the party seeking issuance of the
writ must have no other adequate means to attain the relief he desires[.]” Id. Second,
“the petitioner must demonstrate that his right to the writ is clear and
indistinguishable[.]” Id. (Internal quotation marks omitted.) Finally, “the issuing
court, in the exercise of its discretion, must be satisfied that the writ is appropriate
under the circumstances.” Id.
19
The second approach we have used involves five “nonconclusive guidelines.”
Id.
(1) whether the party has alternative means to secure relief; (2) whether
the party will be damaged in a way not correctable on appeal; (3)
whether the district court’s order constitutes an abuse of discretion; (4)
whether the order represents an often repeated error and manifests a
persistent disregard of federal rules; and (5) whether the order raises
new and important problems or issues of law of the first impression.
In re Qwest Commc’ns, 450 F.3d 1179, 1184 (10th Cir. 2006) (internal quotation
marks omitted).
While we may have used both approaches in isolation in the past, they unfold
similarly in practice. Furthermore, they are best understood as providing an
analytical framework which guides our assessment of whether a given case calls for
the extraordinary remedy of a writ of mandamus.
Turning to the first “condition,” from In re Cooper, which largely tracks the
first two guidelines from In re Qwest, we are persuaded that the Government has no
further grounds for relief. First and foremost, the Government has represented both
to us and to the district court that it intends to follow the guidance contained in the
U.S. Attorney’s Antitrust Manual which instructs that antitrust prosecution of claims
such as this one is only appropriate when the alleged restraint is governed by the per
se rule.
The other mandamus conditions and guidelines, however, do not militate so
cleanly in favor of issuing the writ. Under In re Cooper, the petitioner’s right to the
writ must be “clear and indisputable.” 568 F.3d at 1187; see also In re Qwest, 450
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F.3d at 1184 (listing third guideline as whether “the district court’s order constitutes
an abuse of discretion”).
To be sure, were the merits of the rule of reason order before us we might very
well reach a different conclusion than did the district court. After all, “an agreement
to allocate or divide customers between competitors within the same horizontal
market, constitutes a per se violation of § 1 of the Sherman Act,” Suntar Roofing,
Inc., 897 F.2d at 473 (10th Cir. 1990), and Defendants’ efforts to distinguish their
agreement from a traditional customer allocation agreement are mostly unpersuasive.
Despite Defendants’ arguments otherwise, it is immaterial whether a customer
allocation agreement applies to new or existing customers, Palmer v. RBG of
Georgia, Inc., 498 U.S. 46, 49–50 (1990), and there is no rule that allocation
agreements are only subject to the per se rule if customers are divided
geographically, see United States v. Cadillac Overall Supply Co., 568 F.2d 1078,
1088 (5th Cir. 1978). Nor does it matter that the alleged agreement would only affect
a small number of potential customers, cf. United States v. Reicher, 983 F.2d 168,
170 (10th Cir. 1992) (holding that a conspiracy to rig a single bid, and therefore
affect only a single customer, is subject to per se analysis), and any lack of judicial
familiarity with the Heir Location Services industry is largely irrelevant, Arizona v.
Maricopa Cty. Med. Soc’y, 457 U.S. 332, 346 (1982).
Nor does the Heir Location Services industry appear to be as sui generis as
Defendants would have us believe. The gravamen of the indictment is that prior to
the agreement an heir could be contacted by two companies, who would then
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compete for the heir’s business by offering lower contingency fees. After the
agreement, the companies would no longer have to compete for these heirs, thereby
erasing the incentive to reduce their fees. It seems, then, that this is largely
indistinguishable from a traditional customer allocation agreement, which can and
does appear in many iterations custom tailored to the industry involved. See Topco,
405 U.S. at 608 (describing customer allocation agreement as “an agreement between
competitors at the same level of the market structure to allocate territories in order to
minimize competition”).
Defendants argue that this particular agreement should be reversed under a
rule of reason analysis because it is a market inefficiency to have two firms chasing
after the same customers, and the agreement ostensibly incentivizes companies to
look for new lines of heirs rather than fighting over a shrinking pie. But Supreme
Court jurisprudence is clear: where the per se rule applies, it is of no consequence
that an agreement could potentially bring net economic benefits to some part of the
market—here to the alleged conspirators. The per se rule recognizes that “[f[or the
sake of business certainty and litigation efficiency, we have tolerated the invalidation
of some agreements that a fullblown inquiry might have proved to be reasonable.”
Maricopa Cty. Med. Svcs., 457 U.S. at 344.
But even if the district court’s ruling holding otherwise was in error, it does
not seem to be the gross “abuse of discretion” contemplated by In re Qwest, 450 F.3d
at 1184, nor the “clear and indisputable” error called for by In re Cooper, 568 F.3d at1187 required to support a mandamus order from us. A writ of mandamus is not
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license to ignore the bounds of our appellate jurisdiction simply because we might
disagree with the reasoned approach of our district court colleagues.
Finally, the fourth and fifth In re Quest mandamus guidelines ask whether the
order represents a repeated error, or whether it raises new and important questions of
first impression. 450 F.3d at 1184. Neither applies in this instance. The government
has not been able to draw our attention to other instances of this error occurring in
legally comparable sanctions, and we do not contemplate a sudden surge of litigation
concerning the antitrust status of Heir Location Services firms.
All told, we cannot conclude that mandamus is appropriate under these
circumstances. See In re Cooper, 568 F.3d at 1187. Were we to hold otherwise, our
circuit could expect a flood of mandamus petitions, and our case would soon be cited
for the proposition that the jurisdictional boundaries created by 18 U.S.C. § 3731 are
easily eluded through the use of mandamus. Thus, to grant the requested mandamus
relief here seems not only to be without legal support, it also would be poor policy.
Perhaps on remand the district court will reconsider its rule of reason order.
After all, the parties’ dispute before this court has allowed this issue to be more fully
explored and assessed.7 We are acutely aware that we write with the benefit of
7
Cf. Fed. R. Civ. P. 54(b) (“[A]ny order or other decision, however
designated, that adjudicates fewer than all the claims or the rights and liabilities of
fewer than all the parties . . . may be revised at any time before the entry of a
judgment[.]”); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12
(1983) (“[E]very order short of a final decree is subject to reopening at the discretion
of the district judge.”).
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detailed briefing and abundant time, while the district court here was incentivized to
rule from the bench on this complicated issue.
The order defendants drafted that was ultimately adopted by the district court
first reasons that the per se rule is inapplicable because the agreement was
“structured in an unusual way” in that it only applied to new customers. On remand,
the district court should consider Palmer, 498 U.S. at 49 (holding it error to conclude
that “an allocation of markets or submarkets by competitors is not unlawful unless
the market in which the two previously competed is divided between them”)
(emphasis added) and Topco, 405 U.S. at 608. Second, Defendants’ drafted order
attempted to distinguish this agreement because it “affected a small number of
estates.” Aplt. App. at 135. On remand, the district court should consider United
States v. Reicher, 983 F.2d 168, 170 (10th Cir. 1992). Finally, the proposed order
reasons that the Heir Location Services industry is a “relatively obscure industry”
with “an unusual manner of operation.” Aplt. App. at 135. On remand, the court
should consider Maricopa Cty. Med. Soc’y, 457 U.S. at 346 (the focus is on the
particular practice involved—here, customer allocation agreements—not on the
industry in which the allegedly unlawful practice was used.).
For these reasons, given the further exposition of these issues that occurred in
front of this Court, it is possible the district court may decide to reassess its rule of
reason order on remand. However, because we do not have jurisdiction over the
order and because we do not believe the case presents issues appropriate for
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mandamus, we DISMISS the government’s appeal of the district court’s rule of
reason order.
III. CONCLUSION
When our founders set out to establish the coordinate branches of government
they took pains to establish limits on each.
Here, the district court’s order dismissing the indictment as outside the statute
of limitations clearly falls within the ambit of our authority. Because overt acts in
furtherance of the alleged conspiracy occurred within the statutory period, we find
that dismissal was inappropriate. But we are powerless, even if we were to conclude
it appropriate, to offer relief from the district court order declining to allow the
government to pursue this antitrust indictment under a per se approach. Accordingly
we REVERSE the order dismissing the indictment, DISMISS the appeal regarding
the rule of reason order for lack of appellate jurisdiction, and REMAND for further
proceedings consistent with this opinion.
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