author: KELLEHER, District Judge:

text:
    In re Felipe SADIN, Appellant.
    No. 1250, Docket 74-2003.
    United States Court of Appeals, Second Circuit.
    Submitted Aug. 13, 1974.
    Decided Jan. 23, 1975.

      Helena Pichel Solleder, New York City, for appellant.
    Paul J. Curran, U. S. Atty., New York City (Steven A. Schatten, John D. Gordan III, Asst. U. S. Attys., of counsel), for appellee.
    Before OAKES, Circuit Judge, and FRANKEL and KELLEHER, District Judges.

       Of the Southern District of New York and Central District of California, respectively, sitting by designation.

   KELLEHER, District Judge:

This appeal is from an order of civil contempt entered on July 19, 1974, pursuant to 28 U.S.C. § 1826, by Judge Kevin Duffy of the United States District Court for the Southern District of New York.

We affirm.

Appellant, a Spanish-speaking Cuban who understands and speaks no English, was indicted on April 11, 1974, by a Federal Grand Jury in the Southern District of New York and charged with conspiracy to violate, and the substantive violation of, the Federal Narcotics Laws, 21 U.S.C. §§ 812, 841(a)(1), (b)(1)(A). Because appellant was a permanent resident in the Northern District of Ohio, the indictment was transferred there pursuant to Rule 20, Federal Rules of Criminal Procedure, where, on June 28, 1974, appellant pleaded guilty to all counts.

On July 9, 1974, appellant was summoned before a Federal Grand Jury in the Southern District of New York. He there refused to answer certain questions concerning the activities charged in the indictment. Appellant was immediately brought before Judge Robert J. Ward, the then-sitting Part I Judge, where he invoked his Fifth Amendment privilege against self-incrimination. Judge Ward apparently accepted the claim of privilege for the purposes of the July 9th proceedings, but directed that appellant be returned to the Grand Jury room.

Appellant was brought before the Grand Jury on July 17, 1974, where he was informed of his right to refuse to answer for just cause, of his right to have counsel outside the Grand Jury room,, and of his right to appointed counsel. Asked if he had retained and consulted with a Mr. Kaplan, the attorney who represented him in the Ohio guilty plea, in connection with this Grand Jury proceeding, appellant responded in the affirmative. Appellant again refused to answer any questions. Shortly thereafter, on the same day, appellant was granted immunity pursuant to 18 U.S.C. §§ 6002 and 6003 in connection with his Grand Jury testimony. Appellant was then recalled before the Grand Jury, and the immunity order was read and translated for him. He was then advised that if he refused to answer any questions, he could be subjected to imprisonment pursuant to 28 U.S.C. § 1826. Appellant persisted in his refusal to answer any questions. He was then brought before Judge Duffy, the Part I Judge, where he still refused to answer any questions. Upon inquiry by the Court, appellant said that he had discussed his appearance with an attorney. Accordingly, Judge Duffy, pursuant to 28 U.S.C. § 1826, found appellant in contempt and remanded him to the custody of the Attorney General until he answered, or for the term of the Grand Jury. At the same time, Judge Duffy ordered a Spanish-speaking attorney assigned to appellant and stated that, should he decide to testify, he was to be returned directly to court.

Court-appointed counsel conferred with appellant that day and took immediate steps to obtain a hearing before Judge Duffy in an effort to have the judgment set aside and vacated. Because of other commitments, the Court was unable to grant a hearing until Friday morning, July 19, 1974. At the July 19, 1974, hearing, appellant’s court-appointed counsel for the first time had an opportunity to read a copy of the proceedings before Judge Duffy and the Grand Jury. Appellant’s counsel argued before Judge Duffy that the Court’s contempt order should be vacated and set aside because appellant was not represented by counsel at the July 17, 1974, hearing, and that proceeding was so summary as to violate appellant’s right to due process of law. In denying the motion to set aside and vacate its contempt order, the Court “reconsidered” what it had done and, over counsel’s protest, again asked appellant if he persisted in refusing to answer the questions put before him by the Grand Jury. After consulting with counsel, appellant refused to answer. The Court again found the witness in contempt. Appellant was “paroled” by Judge Duffy pending the outcome of his appeal. It should be noted that on July 29, 1974, appellant was sentenced to five years in prison in Ohio for his violation of the Federal Narcotics Laws.

In order properly to dispose of this case, this Court need only reach the question of whether the proceedings on July 17, 1974, and July 19, 1974, were so summary as to deny appellant due process of law.

There appears to be a question raised in this appeal as to whether appellant had retained counsel, had knowingly waived his right to counsel or was entitled to the presence of counsel during the July 17, 1974, proceedings. Any error in this regard we think was cured when the Court appointed counsel after the July 17, 1974, hearing, and, therefore, we need not now address any questions concerning appellant’s right to the effective assistance of counsel in a civil contempt proceeding.

28 U.S.C. § 1826 provides in part that any witness who refuses without just cause to comply with an order of the court to testify may summarily be ordered confined until such time as he is willing to testify.

The only holding in this court which addresses civil contempt procedures brought under 28 U.S.C. § 1826 because of a refusal to testify after a grant of immunity before a Grand Jury is United States v. Handler, 476 F.2d 709 (2d Cir. 1973), in which we held that in the light of the specific provision of § 1826(a) permitting the court “summarily” to order confinement, “certain concessions to ideal process must be made.” 476 F.2d at 713. The question here is whether those “concessions” are total, permitting confinement in effect as for summary criminal contempt under Rule 42(a), Federal Rules of Criminal Procedure, or whether the “procedural regularity” of Rule 42(b) or some modified form thereof must prevail.

This Court has repeatedly held that summary criminal contempt under Rule 42(a) of the Federal Rules of Criminal Procedure deprives the contemnor of procedural safeguards, and is, thereby, available only when immediate punishment is necessary to put an end to acts disrupting the proceedings. United States v. Pace, 371 F.2d 810 (2d Cir. 1967); United States v. Marra, 482 F.2d 1196 (2d Cir. 1973); United States v. Wilson, 488 F.2d 1231 (2d Cir. 1973).

In Harris v. United States, 382 U.S. 162, 86 S.Ct. 352, 15 L.Ed.2d 240 (1965), Harris was adjudged guilty of criminal contempt under Rule 42(a), Federal Rules of Criminal Procedure, for refusing to answer certain questions before the Grand Jury despite the trial judge’s promise of immunity. After the Court gave him an opportunity to purge himself by testifying, he continued to invoke the privilege against self-incrimination. He was summarily adjudged guilty of criminal contempt under Rule 42(a). The Supreme Court reversed, holding that under the circumstances summary punishment was an abuse of the contempt power and that notice and hearing as provided under Rule 42(b) was required. In so holding, the Court was “concerned solely with ‘procedural regularity’ which, as Mr. Justice Brandéis said in Burdeau v. McDowell, 256 U.S. 465, 477, 41 S.Ct. 574, 576, 64 L.Ed. 1048 (dissenting), has been ‘a large factor’ in the development of our liberty.' Rule 42(b) prescribes the ‘procedural regularity’ for all contempts in the federal regimes [footnote omitted] except those unusual situations envisioned by Rule 42(a) where instant action is necessary to protect the judicial institution itself.” 382 U.S. at 167, 86 S.Ct. at 355, 356. (emphasis added). While Harris was decided before the enactment in 1970 of 28 U.S.C. § 1826, we think its commands have some applicability to that statute.

In a similar case, United States v. Alter, 482 F.2d 1016 (9th Cir. 1973), the Ninth Circuit reversed the trial court’s summary civil contempt order entered pursuant to 28 U.S.C. § 1826 against a grand jury witness for his failure to answer certain questions after a grant of immunity. In testing the applicability of past holdings concerning summary contempt procedures against the requirements of 28 U.S.C. § 1826(a), the Ninth Circuit made two relevant determinations. The Court, discussing Gelbard v. United States, 408 U.S. 41, 92 S.Ct. 2357, 33 L.Ed.2d 179 (1972), stated: “the [Supreme] Court said that section 1826(a) was ‘intended to codify the existing practice of the federal courts,’ citing portions of its legislative.history and Shillitani (408 U.S. at 42-43 n. 1, 92 S.Ct. at 2358). The unmistakable import of these observations is that section 1826(a) has no effect upon the procedural ground rules the Court has laid in cases anteceding . . . the enactment of the statute — rules which expressly forbade summary proceedings for such contempts.” 482 F.2d at 1022. After a review of Harris, Shillitani and Gelbard, the Ninth Circuit concluded that, “a proceeding in contempt to compel a federal grand jury witness to testify is civil enough to foreclose his claim that he has a constitutional right to trial by jury (Shillitani) and criminal enough to require the application of Rule 42(b) (Harris) . . .. It follows, therefore, that . . . [the contemnor] was entitled to notice prescribed by Rule 42(b) and to a reasonable time to prepare his defense, i. e., to show ‘just cause’ for refusing to respond.” 482 F.2d at 1023.

Further, as the Court in Alter found, “[t]he determination of how much time is reasonable is committed to the sound discretion of the district court. As we learned from Harris, however, the proceedings cannot be conducted summarily, and in no event can the time be reduced below a minimum needed adequately to prepare a defense. A reasonable time will vary according to the circumstances of each case.” 482 F.2d at 1023.

We hold that in a civil contempt proceeding pursuant to 28 U.S.C. § 1826 where, after a grant of immunity, a witness before the Grand Jury persists in his refusal to testify, he is basically entitled to the “procedural regularities” prescribed by Rule 42(b). See Wilson, supra, 488 F.2d at 1233-34; Marra, supra, 482 F.2d at 1202.

In applying the requirements of Rule 42(b) to the facts in this case, we must consider both hearings. First, we agree fully with Judge Duffy’s own characterization that the proceeding on July 17, 1974, was “about as summary as you will find it.” There remains the question of whether the “reconsideration” on July 19, 1974, cured any of the procedural defects in the first hearing. The hearing on the 19th was one in which the contempt order was reconsidered and appellant, pursuant to Rule 42(b), had a reasonable time to prepare a defense. We consider that he had an adequate opportunity to make a showing of “just cause” for his refusal to respond. He made none, and it appeal’s from the record that none was available.

Appellant claims that his guilty plea absolved him of the duty to furnish testimony in the Grand Jury with respect to the crime he was involved in and, therefore, the immunity granted under 18 U.S.C. §§ 6002 and 6003 was improper. These claims are unfounded. In United States v. Reide, 494 F.2d 644 (2d Cir. 1974), we held that since a defendant had already been adjudged guilty of a robbery, he had no right to remain silent on matters concerning it. Moreover, in United States v. Wilson, 488 F.2d 1231 (2d Cir. 1973), witnesses who were granted immunity were required to testify in an accomplice’s trial. We think these holdings are equally applicable to testimony before the Grand Jury.

Appellant further claims that the contempt order of July 17, 1974, should be vacated because he was not given proper notice. In Handler, supra, 476 F.2d at 713, we held, in light of the witness’s actual knowledge of the nature of the contempt proceeding against him, that there was no denial of due process by failure to provide formal notice. Here, appellant and his court-appointed counsel had adequate notice of the July 19, 1974, hearing. Moreover, notice is provided for in Rule 42(b), Federal Rules of Criminal Procedure, in order to allow a reasonable time for the preparation of a defense. The notice here was adequate for, as we found above, appellant had a reasonable time to prepare his defense.

Order and judgment affirmed.


source: Caselaw Access Project

author: HASTINGS, Senior Circuit Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. FINIS P. ERNEST, INC., and Modern Asphalt Paving and Construction Co., Defendants-Appellants.
    Nos. 74-1276, 74-1277.
    United States Court of Appeals, Seventh Circuit.
    Argued Nov. 8, 1974.
    Decided Jan. 29, 1975.
    Rehearing Denied Feb. 25, 1975.

      Edward G. Maag, Belleville, Ill., Phillip A. Montalvo, E. St. Louis, Ill., for defendants-appellants.
    Henry A. Schwarz, U. S. Atty., and Jack A. Strellis, Asst. U. S. Atty., E. St. Louis, Ill., for plaintiff-appellee.
    Before MARIS  and ' HASTINGS, Senior Circuit Judges, and TONE, Circuit Judge.

       Senior United States Circuit Judge Albert Branson Maris of the Third Circuit is sitting by designation.

   HASTINGS, Senior Circuit Judge.

Defendants Finis P. Ernest, Inc. (Ernest) and Modern Asphalt Paving and Construction Co. (Modern) were indicted under a single count indictment for violation of the Sherman Act, 15 U.S.C. § 1, for a combination and conspiracy to submit collusive, non-competitive and rigged bids to the City of East St. Louis, Illinois, for a city sanitary sewer project. The case was tried to a jury, the Honorable James L. Foreman, Judge, presiding, and the jury found both defendants guilty. The court denied all of defendants’ post-trial motions and imposed fines of $35,000 and costs on Ernest and $15,000 and costs on Modern.

Defendants raise three issues in this appeal:

(1) Whether there was sufficient evidence to prove the jurisdictional requirement of a restraint of interstate commerce;
(2) Whether the evidence was sufficient to prove a conspiracy between the defendants to rig bids; and
(3) Whether the court erred in admitting evidence showing that Modern had insufficient funds in its checking account to cover the check which it submitted to the city with its bid.

JURISDICTION

The Sherman Act, 15 U.S.C. § 1, states: “Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal . .” The Supreme Court has recently reiterated that jurisdictional inquiry under this general language requires a particularized judicial determination which must turn on the circumstances presented in each case. Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 197 fn. 12, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974). See also Rasmussen v. American Dairy Association, 9 Cir., 472 F.2d 517, 526-527 (1972), cert. denied, 412 U.S. 950, 93 S.Ct. 3014, 37 L.Ed.2d 1003 (1973).

In the instant case, the government introduced evidence that materials used by Ernest in construction of the sanitary sewers were manufactured outside the State of Illinois. Clay sewer pipe manufactured in Indiana and manhole frames and covers manufactured in Wisconsin were purchased from Sidener Supply Company in Illinois. A sewer pumping station was purchased from Davco Manufacturing Company in Georgia. The cost of these items was approximately $9,307. The project was built under contract with the City of East St. Louis with funds supplied by the United States Department of Housing and Urban Development (HUD). In February 1971 HUD approved $300,000 for public improvements, primarily sewer construction. In October 1971, after the city had had to reject bids for sanitary and storm sewer construction because they substantially exceeded the engineer’s estimate, the city requested an additional $300,000 for these projects and the increase was approved by HUD in February 1972. The question is whether these facts and the inferences which may be drawn therefrom satisfy the jurisdictional requirement of the Sherman Act.

In determining whether particular circumstances constitute a “restraint of trade or commerce among the several states” courts have taken differing approaches. See, for example, Eiger, The Commerce Element in Federal Antitrust Litigation, 25 Fed.B.J. 282 (1965); Note, Portrait of the Sherman Act as a Commerce Clause Statute, 49 N.Y.U.L.Rev. 323 (1974). Problems of interpretation seem to be due in large part to the fact that the “single cryptic phrase defines both the conduct prohibited by the Act and the statute’s jurisdictional reach.” Rasmussen v. American Dairy Association, 9 Cir., 472 F.2d 517, 521 (1972), cert. denied, 412 U.S. 950, 93 S.Ct. 3014, 37 L.Ed.2d 1003 (1973).

Our problem of interpretation is whether the elements of restraint and interstate commerce may be satisfied separately or whether jurisdiction requires that the restraint be upon the interstate commerce. In several recent cases the Court of Appeals for the Ninth Circuit has viewed the question of jurisdiction under the Sherman Act as entirely one of constitutional power: whether defendants’ conduct had a sufficient relationship to interstate commerce to be subject to regulation by Congress. Gough v. Rossmoor Corp., 9 Cir., 487 F.2d 373, 376 (1973); In re Western Liquid Asphalt Cases, 9 Cir., 487 F.2d 202 (1973), rev’d in part sub nom. Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974). See also Ford Wholesale Co. v. Fibreboard Paper Products Corp., 9 Cir., 493 F.2d 1204, cert. denied, 419 U.S. 876, 95 S.Ct. 138, 42 L.Ed.2d 115 (1974).

The analysis of In re Western Liquid Asphalt Cases is illustrative of this approach. The Ninth Circuit’s decision there on the issue of Sherman Act jurisdiction was unaffected by the Supreme Court’s decision in the case reported as Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974), since the Court had limited its grant of certiorari to the questions of jurisdiction under the Clayton and Robinson-Patman Acts. In that case the dispute concerned asphaltic concrete which was produced in California and delivered to construction sites in California only. The Court of Appeals held that jurisdiction under the Sherman Act was satisfied because the “production of asphalt for use in interstate highways rendered the producers ‘instrumentalities’ of interstate commerce and placed them ‘in’ that commerce as a matter of law.” 487 F.2d at 204. The court’s bifurcated analysis made it unnecessary in deciding the question of jurisdiction to consider whether any interstate commerce was allegedly restrained. This approach, which widens the reach of the Act, finds some support in decisions of the Supreme Court which emphasize that Congress in the Sherman Act intended to exercise the full extent of its constitutional authority under the Commerce Clause. See, e. g., Gulf Oil Corp., supra, at 201, 95 S.Ct. 392; United States v. Frankfort Distilleries, Inc., 324 U.S. 293, 298, 65 S.Ct. 661, 89 L.Ed. 951 (1945); United States v. South-Eastern Underwriters Association, 322 U.S. 533, 557-559, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944); Apex Hosiery Co. v. Leader, 310 U.S. 469, 495, 60 S.Ct. 982, 84 L.Ed. 1311 (1940).

In situations such as the instant case, which involve per se violations of the Act, there is an additional reason for not requiring proof of an adverse impact on interstate commerce to satisfy the jurisdictional requirement. A per se violation is activity, such as price fixing, for which effects need not be shown to establish the substantive offense. . Restraints in this category “because of their pernicious effect on competition and lack of any redeeming 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 Pacific Railway Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958). Where activity falls within one of these classes of restraints it is “not for the courts to decide whether in an individual case injury had actually occurred” in determining whether there has been a substantive violation of the Act. Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 211, 79 S.Ct. 705, 709, 3 L.Ed.2d 741 (1959). It may be anomalous to require proof of effects to satisfy jurisdiction in those cases where proof of effects is not necessary to establish the substantive offense. See P. Areeda, Antitrust Analysis § 178 (1967).

The alternative approach to Sherman Act jurisdiction which considers the nexus between restraint, and interstate commerce is supported by other decisions of the Ninth Circuit, decisions in other circuits, as well as by other language of the Supreme Court.

The jurisdictional analysis in Page v. Work, 9 Cir., 290 F.2d 323 (1961), seems inconsistent with the Ninth Circuit’s most recent decisions, yet Page continues to be cited with approval in those cases. In Page, the complaint alleged that the defendants eliminated competition in legal advertising in Los Angeles County. The ■ court noted that the defendant newspapers bought newsprint from outside the state, carried some national news and advertising and had some out-of-state subscribers. The court nevertheless concluded that since the claimed restraints were “on a purely local level and were wholly directed to [the] local intrastate market,” 290 F.2d at 330, the jurisdictional requirement of the Sherman. Act was not satisfied. The court said, “The test of jurisdiction is not that the acts complained of affect a business engaged in interstate commerce, but that the conduct complained of affects the interstate commerce of such business.” 290 F.2d at 330. In distinguishing a group of other newspaper cases the court said further, “[i]n all the above cases a restraint of interstate commerce was found which was determinative of federal jurisdiction.” 290 F.2d at 331. There is no question in Page that the locus of the restraint was a consideration in determining jurisdiction. See also, Sun Valley Disposal Co. v. Silver State Disposal Co., 9 Cir., 420 F.2d 341 (1969).

Other courts have also found jurisdiction absent where interstate activities were alleged where there was no showing that the restraint operated on the interstate commerce. Rosemound Sand & Gravel Co. v. Lambert Sand & Gravel Co., 5 Cir., 469 F.2d 416 (1972); Lieberthal v. North County Lanes, Inc., 2 Cir., 332 F.2d 269 (1964); Elizabeth Hospital, Inc. v. Richardson, 8 Cir., 269 F.2d 167, cert. denied, 361 U.S. 884, 80 S.Ct. 155, 4 L.Ed.2d 120 (1959); Saint Anthony-Minneapolis, Inc. v. Red Owl Stores, Inc., 316 F.Supp. 1045 (D.Minn.1970).

The Supreme Court has never decided the question of whether a business with out-of-state activities which engages in a local conspiracy to restrain commerce falls within the jurisdiction of the Sherman Act even though there is no restraining effect on interstate commerce. In deciding related questions, however, the Court has used language which might suggest that an interstate restraint is required for jurisdiction.

In a landmark case holding that a locally applied restraint came within the purview of the Act if the result was to restrain interstate commerce, the court stated the jurisdictional issue like this: “We first should be satisfied that the activities on which restraints are alleged to have been exerted constitute commerce among the states.” United States v. Women’s Sportswear Manufacturers Association, 336 U.S. 460, 461, 69 S.Ct. 714, 714, 93 L.Ed. 805 (1949). The Court went on to explain that whether defendants were engaged in interstate commerce was not determinative.

The source of the restraint may be intrastate, as the making of a contract or combination usually is; the application of the restraint may be intrastate, as it often is; but neither matters if the necessary effect is to stifle or restrain commerce among the states. If it is interstate commerce that feels the pinch, it does not matter how local the operation which applies the squeeze. 336 U.S. at 464, 69 S.Ct. 714.

In its recent decision in Gulf Oil Corp., supra, the Supreme Court quoted this language from Women’s Sportswear and briefly reviewed, in dicta, the jurisdictional requirement of Section 1 of the Sherman Act. The Court said, “The jurisdictional reach of § 1 thus is keyed directly to effects on interstate markets and the interstate flow of goods.” 419 U.S. at 195, 95 S.Ct. 392. After noting that Section 1 was designed to utilize the full extent of the constitutional power under the commerce clause, the Court went on to state that a local contract, combination or conspiracy “may constitute a retraint within the meaning of § 1 if it substantially and adversely affects interstate commerce.” Id.

The possibility that an adverse effect upon interstate commerce is a jurisdictional requirement is also suggested by language in earlier decisions of the Court. See, e. g., United States v. Employing Plasterers Association, 347 U.S. 186, 188, 74 S.Ct. 452, 98 L.Ed. 618 (1954); Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 234, 238-239, 68 S.Ct. 996, 92 L.Ed. 1328 (1948).

Thus, there is substantial support for both responses to the question of whether Sherman Act jurisdiction requires proof of a restraint on interstate commerce. We need not resolve that issue here, however, because we are convinced that there is sufficient evidence in this case to support a finding of jurisdiction under either approach.

Under the first approach we need only find that the restraint is sufficiently related to commerce that Congress has jurisdiction to act. Here, alleged bid rigging enabled Ernest to obtain the city sewer contract and in performing that contract it used approximately $9,307 worth of materials obtained in interstate commerce. This relationship is sufficient to assure that application of the Sherman Act to this case is not beyond the constitutional authority of Congress. Where a per se restraint is involved, the quantity of interstate commerce is unimportant. United States v. McKesson & Robbins, Inc., 351 U.S. 305, 309-310, 76 S.Ct. 937, 100 L.Ed. 1209 (1956); United States v. Bensinger Co., 8 Cir., 430 F.2d 584, 588 (1970).

If, however, proof of a restraint of interstate commerce is required for jurisdictional purposes, there are sufficient facts to warrant such a finding. Although there was evidence that the price of $9,307 worth of materials was not affected by the alleged bid rigging since the sellers charged their standard prices for the items sold, there is still evidence to support inferences that the defendants’ activity had a restraining effect upon interstate commerce.

The restraint potentially reduced competition in materials in interstate commerce. If there had been genuine competitive bidding, each contractor, in an effort to make the lowest bid, would have obtained competitive prices from materials suppliers. The effect of the restraint was that neither Ernest nor Modern had any incentive to obtain competitive prices from out-of-state suppliers.

Further, where bids are rigged, the price the city will have to pay for the project is artificially increased. The disparity between the bids and the city engineer’s lower estimate of the cost of the project is some evidence that the effect of the defendants’ activity was to increase the city’s cost for the project. Increasing the city’s cost restrains interstate commerce in at least two ways. First, funds for the project came from HUD and its appropriation to the city had to be increased after the bid, higher than the engineer’s estimate, was received. HUD funds are transferred in interstate commerce. An increase in the amount of money required for this project would inevitably mean that there would be less money available for HUD projects elsewhere in the United States. Second, where the city must use more of its available funds to complete the sewer project it will have less money to expend for other projects requiring use of goods shipped in interstate commerce.

We therefore hold that there was sufficient evidence introduced at trial to satisfy the jurisdictional requirement of the Sherman Act.

SUFFICIENCY OF THE EVIDENCE

Appellants argue that the evidence at trial was insufficient to prove that defendants conspired to rig bids for the city sewer construction project. It is not for an appellate court to weigh the evidence or determine the credibility of witnesses. “The verdict of a jury must be sustained if there is substantial evidence, taking the view most favorable to the Government, to support it. ... Participation in a criminal conspiracy need not be proved by direct evidence; a common purpose and plan may be inferred from a ‘development and collocation of circumstances’.” Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). Where the evidence is circumstantial it is not necessary that it be such as to exclude every reasonable hypothesis other than that of guilt. As with direct evidence, it is only necessary that the jury be convinced of guilt beyond a reasonable doubt. Holland v. United States, 348 U.S. 121, 139-140, 75 S.Ct. 127, 99 L.Ed. 150 (1954).

Our review of the evidence in the light most favorable to the government indicates that it was sufficient to prove that the defendants conspired to submit collusive bids to the City of East St. Louis.

Bids for the sanitary sewer project were first let on January 30, 1971. Ernest’s bid was rejected because it was the only bid submitted for that project and because it substantially exceeded the city engineer’s estimate for the cost of the job.

The sanitary sewer job was put up for rebidding on August 6, 1971. This time, only Ernest and Modern submitted bids. Ernest was awarded the contract. The bids were submitted in the form prescribed by the city which called for the listing of sixteen unit prices. Each unit price was to include all labor, materials, overhead, profit, insurance and all other costs required to cover the finished work. Although materials costs might sometimes be standardized, there were no standard prices for unit prices such as these including so many uncertain variables. Nevertheless, in the bid submitted by Modern seven of the sixteen unit prices were identical to those in the Ernest bid. For each of the other nine unit prices, the bid submitted by Modern was slightly higher than Ernest’s bid. The differences in the prices on those items suggest that unit prices of the Modern bid had been arrived at by making simple changes in the unit prices from the Ernest bid. For example, Ernest’s unit price for the first item, laying eight inch sewer pipe at depths of from six to nine feet, was $12.19, while Modern’s bid was $13.19. Modern’s bids on seven of the unit prices could have been the result of merely rounding off Ernest’s bids for those items. For example, Ernest’s bid for item three was $33.42 and Modern’s was $33.50. The pumping station price on the Modern bid had been altered on the form from $49,-050 to $50,550 so as to suggest that it had been deliberately changed to be higher than the Ernest price of $49,750.

There was other evidence that the Modern bid was not a serious one and was submitted so that there would be an appearance of competitive bidding. Modern’s bid had been prepared on the morning the bids were due by one of its employees working at home without anyone’s assistance. No one from Modern inspected the work site or contacted any suppliers.

There were also indications that Modern did not believe it could get the sewer job. It had submitted bids on other contracts which, when combined with this contract, would have committed Modern to construction jobs beyond the amount for which it could obtain a performance bond. Further, it did not appear that Modern expected the city to cash its check submitted with its bid because its checking account did not contain sufficient funds to cover the check.

The government also showed that the two companies would have had an opportunity to agree upon a collusive bid because during the summer when the bids were submitted they were working together on a driveway project.

We find that there was substantial evidence to support the jury’s verdict.

ADMISSION OF EVIDENCE

Finally, appellants argue that it was error to admit testimony of a bank cashier and Modern’s bank statements indicating that there were insufficient funds in its checking account to cover the full amount of Modern’s bid check. Appellants object to the evidence as irrelevant, improper rebuttal testimony, and impeachment on a collateral matter. The trial court held the evidence admissible and relevant to the question of the seriousness of Modern’s bid. We agree.

Appellants contend that the evidence was in the nature of impeachment and collateral to any issue in the case. Impeachment is an attack upon the credibility of a witness. A witness’ testimony may be contradicted without being impeached. United States v. Williamson, 5 Cir., 424 F.2d 353, 355 (1970). Here, the evidence was admissible for a purpose other than impeachment. Modern had introduced evidence to attempt to establish that its bid for the sewer job was a serious one despite the fact that it had not submitted a certified check as required by the bid specifications. The government in rebuttal introduced the evidence of insufficient funds in an attempt to demonstrate that the check was not indicative of a serious bid. The function of rebuttal is to explain, repel, counteract or disprove the evidence of the adverse party. United States v. Mallis, 3 Cir., 467 F.2d 567, 569 (1972); United States v. Crowe, 7 Cir., 188 F.2d 209, 213 (1951). There was no abuse of discretion in admitting the evidence in rebuttal.

The convictions appealed from are, in all respects, affirmed.

Affirmed.

      . See the discussion of Sherman Act jurisdiction in A. Cherney Disposal Co. v. Chicago & Suburban Refuse Disposal Assn., 7 Cir., 484 F.2d 751, 755-759 (1973), cert. denied, 414 U.S. 1131, 94 S.Ct. 870, 38 L.Ed.2d 755 (1974).

      . But see the comment of Mr. Justice Douglas that the Court’s holding might result in a different determination of the Sherman Act question on remand 419 U.S. at 208 n. 6, 95 S.Ct. 392. (Douglas, J., dissenting).

      . Cf. United States v. McCarthy, 7 Cir., 196 F.2d 616, 619 (1952), decided by our court prior to the decision in Holland. While other courts of appeals have since rejected, in light of Holland, the rule of circumstantial evidence followed in McCarthy, our court has not previously had occasion to reconsider the issue. See United States v. Currier, 1 Cir., 454 F.2d 835, 838, 838 n. 6 (1972).

      . Although appellants claim that it was error to admit evidence concerning the checking account, as we discuss infra, we find the evidence was properly admitted.


author: MEREDITH, Chief District Judge.

text:
    HAVENFIELD CORPORATION, Appellee, v. H & R BLOCK, INC., Appellant.
    No. 74-1401.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 13, 1974.
    Decided Jan. 30, 1975.
    Rehearing Denied Feb. 24, 1975.
    Certiorari Denied June 2, 1975.
    See 95 S.Ct. 2395.

      Edward A. Smith, Kansas City, Mo., for appellant.
    E. Frederick Beihl, Kansas City, Mo., for appellee.
    Before VAN OOSTERHOUT, Senior Circuit Judge, HEANEY, Circuit Judge, and MEREDITH, Chief District Judge.

       JAMES H. MEREDITH, Chief Judge, Eastern District of Missouri, sitting by designation.

   MEREDITH, Chief District Judge.

Defendant appeals from a judgment rendered against it and in favor of plaintiff after a directed verdict as to liability and a jury verdict as to damages.

This is an action brought for the recovery of a finder’s fee that plaintiff claimed was due it because of its action in bringing together the defendant and a company which was acquired by defendant, Consumer Communication Services Corporation (hereinafter C.C.S.C.). The action was brought in two counts. Count I alleged an implied-in-fact contract and requested damages based upon a customary fee of $120,000. The alleged customary fee was stated to be based upon a declining percentage formula of five percent (5%) of the first million dollars of the acquisition price, four percent (4%) of the second million, three percent (3%) of the third million, two percent (2%) of the fourth million, and one percent (1%) of the remainder (hereinafter 5 — 4-3—2—1). The purchase price involved in this transaction was $3,000,000, which would yield a fee of $120,000, if the claimed formula was used. Count II alleged in the alternative, that the court should find an implied-in-law contract (quasi-contract) for the reasonable value of plaintiff’s services which plaintiff also alleged would entitle it to a recovery of $120,000. The district court granted plaintiff’s motion for directed verdict at the close of all the evidence on the issue of liability only, and submitted the case to the jury on the issue of damages alone. The jury was instructed on two theories of measuring the damages, the customary fee, if it found that one was, in fact, in existence, or a reasonable fee based upon the value of the plaintiff’s services. The verdict did not specify which theory was used by the jury to arrive at its verdict.

FACTS

Plaintiff is a brokerage house, incorporated in Delaware, and having its principal place of business in New York. Gerald Griffin was the manager of plaintiff’s corporate finance department. Willis Polite was an employee of plaintiff in the same department and under Griffin’s supervision, but based in Cleveland, Ohio.

Defendant is a Missouri corporation, having its principal place of business in Kansas City, Missouri.

C.C.S.C. was an Ohio corporation, having its principal place of business in Columbus, Ohio. C.C.S.C. was engaged in the private postal business.

Prior to the date of December 22, 1970, Grant Bowen, an accountant with Haskins & Sells in Columbus, Ohio, who were accountants for C.C.S.C., introduced C.C.S.C. to Willis Polite for the purpose of assisting C.C.S.C. in obtaining a loan. Polite obtained a copy of “A Proposal” from Bowen, which contained financial and other information about C.C.S.C. The report had been prepared and submitted by Paul Eckelberry, president of C.C.S.C. Polite gave the report to Griffin and discussed with him C.C.S. C.’s interests on several occasions, either by telephone from Ohio or in Griffin’s office in New York.

Griffin was aware of defendant’s interest in acquisitions of companies in the service industry due to the fact that he had presented an acquisition candidate to defendant on a previous occasion while he had been employed by another investment banking house.

On or about December 22, 1970, Griffin called Henry Bloch, defendant’s president, and inquired into defendant’s interest in acquisition in the private postal area. Bloch referred Griffin to Anthony Schwegel, defendant’s director of corporate planning. Griffin stated that he had some information on a firm in the private postal industry which he would send to Schwegel, if he was interested. Schwegel expressed an interest and Griffin sent him a letter and enclosed the document entitled “A Proposal.”

Between December 22, 1970, and March 24, 1971, Griffin and Schwegel had several telephone conversations in which Schwegel expressed an interest in pursuing the matter of possible acquisition. Pursuant to these conversations, plaintiff arranged a meeting between defendant and C.C.S.C., which took place in Columbus, Ohio, on March 24, 1971.

The March 24, 1971, meeting was attended by Bowen, Griffin, Schwegel, Eckelberry, and Robert Perrin, attorney for C.C.S.C. No agreement was reached at the meeting, because after some discussion, it became evident that C.C.S.C. was more interested in obtaining a loan, while defendant was more interested in an acquisition. Schwegel called Griffin shortly after the meeting and informed him that defendant was primarily interested in acquisition and wanted to think about the matter further.

On March 29, 1971, Schwegel wrote to Eckelberry and told him that defendant was interested in considering a possible association with C.C.S.C. and requested a copy of an analysis of C.C.S.C., which had been prepared by a Mr. Rose for a lending institution, and Eckelberry sent the analysis to Schwegel.

Schwegel wrote to Eckelberry on April 16, 1971, with a copy to Griffin, stating that defendant would not establish a relationship with C.C.S.C. at that time, because they were still interested in acquisition, while C.C.S.C. only wanted a loan.

Nothing further happened until August of 1971, when Eckelberry called Schwegel and said that he was ready to consider an acquisition of C.C.S.C. by defendant. Two meetings between defendant and C.C.S.C. occurred on September 13, 1971, in Kansas City, Missouri, and on November 1, 1971, in Columbus, Ohio, at which the possible acquisition was discussed. Plaintiff was not notified that the meetings were to be held or that any negotiations had resumed.

On or about November 22, 1971, Polite told Griffin that he had learned from Bowen and Eckelberry that C.C.S.C. had resumed negotiations with the .defendant. Griffin telephoned Schwegel the next day, and during the course of the conversation, Schwegel acknowledged plaintiff as the “finder.” Griffin confirmed this in a letter dated November 23, 1971, in which he offered plaintiff’s services in helping to consummate the deal. Neither defendant nor C.C.S.C. availed themselves of these services.

Sometime during the fall of 1971, Schwegel and Richard Bloch, defendant’s board chairman, discussed plaintiff’s interest in a fee, and concluded that plaintiff was, in fact, entitled to some compensation.

After meetings held in November or December of 1971 and on January 26, 1972, in Kansas City, attended by defendant, C.C.S.C., and counsel for both parties, defendant acquired the assets of C.C.S.C. for $3,000,000 in the common stock of the defendant.

Defendant has raised four issues on appeal, which will be dealt with individually below.

I.

Defendant first argues that the district court erred in ruling that the New York Statute of Frauds, section 5 — 701.10, New York General Obligations Law, McKinney’s Consol. Laws, c. 24 — A, which requires finder’s fee contracts to be in writing, did not apply in this case. The district court held that under the Missouri rule governing choice of law, which the court was bound to follow, Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), the law of the state which has the most significant contacts with the parties and the transaction is to be applied. This is also the rule stated in the Restatement of the Law, 2d, Conflict of Laws, section 188, which deals with contract actions where no express choice of law has been made:

§ 188. Law Governing in Absence of Effective Choice by the Parties
(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.
(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.
(3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in §§ 189 — 199 and 203.

The Restatement was established as the law in Missouri by the Missouri Supreme Court in Kennedy v. Dixon, 439 S.W.2d 173 (Mo. en banc 1969), which was a tort action. It has since been held that the contract rules of the Restatement are also to be followed in Missouri, American Institute of Marketing Systems v. Brooks, 469 S.W.2d 932 (Mo.App.1971).

The district court held that both Ohio and Missouri had more significant contacts with the parties and transactions than did New York. Neither Ohio nor Missouri law bars the enforcement of oral contracts for finder’s fees.

Defendant contends that the significant contacts approach is meaningless in this situation, because of the difficulty in pinpointing the location of contracting, negotiations, and performance. Defendant also contends that New York has a greater interest in having its law applied and that, therefore, it should be applied. Three cases are cited in support of this argument. Intercontinental Planning, Ltd. v. Daystrom, 24 N.Y.2d 372, 300 N.Y.S.2d 817, 248 N.E.2d 576 (1969), Pallavicini v. International Telephone & Telegraph Corp., 41 A.D.2d 66, 341 N.Y.S.2d 281 (1973), and Denny v. American Tobacco Co., 308 F.Supp. 219 (N.D.Cal.1970). These cases discussed the role of New York as an international market and financial center, and the New York Legislature’s desire to protect its own citizens and those who come into the state to take advantage of its unique position in the world of commerce. Also mentioned is a desire to prevent unfounded and multiple finder’s fee claims from being inflicted on those whom the state wishes to protect. This, it is stated, is the reason the New York Statute of Frauds contains the provision on finder’s fees. Defendant argues that because New York has taken the additional step in its Statute of Frauds, it has a greater interest in having its law enforced than do Ohio or Missouri. This appears to be an argument that the state with the strictest or most pervasive law automatically has a greater interest in having its law applied than does a state with a more general or more lenient law. This court does not agree.

Each of the three cases cited by the defendant looked first to the most significant contacts, and found them to be in New York, and then went on to talk about the greater interest that New York had in having its law applied.

The district court in the instant case noted the following contacts with the State of Ohio:

(1) C.C.S.C., the subject of the identification and introduction was located in Ohio.
(2) The identification and initiation of the idea took place in Ohio through the activities of Polite.
(3) The physical arrangements for the meeting took place in Ohio.
(4) The introduction and initial opportunity to propose acquisition took place in Ohio.

Defendant argues that these contacts are insignificant because the location of C.C. S.C. in Ohio was fortuitous and that H & R Block could have acquired a company located in any number of other states. The court finds little merit to this argument. In a contract action, unlike a tort action, the location of the parties and events are known ahead of time and make up a part of the general expectations of the parties. When actions are taken in a particular state, there are, or should be, expectations that the laws of that state may apply to those actions. The fact that defendant could have acquired a company in another state does nothing to diminish the contacts in Ohio.

The district court noted, as contacts in Missouri, that defendant is a Missouri corporation, with its principal place of business there, and that the acquisition was closed there. Defendant argues that the acquisition contract is separate from the finder’s fee contract and that all matters relating to the acquisition contract are irrelevant. However, it is the fact that the acquisition was consummated that gives rise to liability on the finder’s fee contract, so the two contracts are very closely connected.

The only New York contacts are that it is the domicile of the plaintiff, and that Griffin made his initial contacts from there. The fact that the New York party contacted the Missouri party is of some significance. With long distance communication readily available, it is often hard to pinpoint where certain negotiations and agreements take place. In a situation, such as is found in this case, determining who made the initial contact may be a factor in deciding who went into a particular state, even if only by telephone, to seek out business from another party located in that state, see Whitman v. Green, 289 F.2d 566, 568 (9th Cir. 1961). Applying that principle to the situation here, it can be concluded that plaintiff went into Missouri to pursue this transaction. Therefore, using the contact principle of justifying the reasonable expectations of the parties, it is clear that they could reasonably expect Missouri law to apply to the terms of any agreement made. It would be an unreasonable stretching of the facts to say that defendant went into New York, and, therefore, defendant is not among those persons whom the New York Legislature has a great interest in protecting.

The district court did not err in refusing to apply the New York Statute of Frauds.

II.

The defendant’s second allegation of error is that the district court improperly directed a verdict for the plaintiff on the issue of liability, because of three factual issues which defendant claims were still in dispute:

(1) Whether, at the time of the alleged contract, plaintiff had an expectation of receiving a customary fee based on the 5-4 — 3-2—1 formula.
(2) Whether, at the time of the alleged contract, defendant intended to pay the plaintiff a customary fee based upon the 5 — 4—3—2—1 formula.
(3) Whether, in fact, the alleged finder’s fee services were performed at the request and for the benefit of defendant and not some other person.

The district court specifically stated that it was not directing a verdict for a customary fee or any other amount, but was directing the verdict only as to liability to pay some fee. The question of what the amount of the fee was to be was left up to the jury. Therefore, on the first two issues noted above, the defendant received what he was entitled to, a jury determination of those questions.

The district court based its directed verdict on an admission of liability made by defendant in its answers to interrogatories, and also on the evidence that came out during the trial.

The admission found in the answers to interrogatories stated:

Defendant has refused to compensate plaintiff in the excessive amount claimed by plaintiff, namely $120,000, but has not refused to compensate plaintiff in some lesser amount which is reasonable and commensurate with the services performed.

Defendant contends that this can only be construed as an admission of liability under Count II (quasi-contract), and, therefore, could not form a basis for a directed verdict on an implied-in-fact contract. Defendant points out that the admission speaks of a reasonable fee only. There is some question whether one can admit liability in a contract action and then limit that liability to that which would be available under a quasi-contract. If liability is admitted, that is an implicit admission that there was a contract, even if only an implied-in-fact one in which there may be some dispute over the amount of compensation due one party or the other.

The directed verdict was also based upon the evidence that was adduced at trial. Defendant argues that in order to direct a verdict, the evidence must all point one way, Giordano v. Lee, 434 F.2d 1227 (8th Cir. 1970), and that the evidence should be viewed in the light most favorable to the party against whom the verdict is directed, National Molasses Co. v. Herring, 221 F.2d 256 (8th Cir. 1955).

Keeping those two principles in mind, it is important to review some significant facts that came out in the trial:

(1) Defendant accepted plaintiff’s services as far as identification and introduction.
(2) Schwegel, the employee of defendant most closely associated with the transaction, told his superiors that he felt there was an obligation on their part to compensate Havenfield for its services.
(3) Prior to the acquisition of C.C.S.C. by defendant, Schwegel acknowledged plaintiff as the “finder” in that acquisition.
(4) Four expert witnesses, including defendant’s own expert, testified that plaintiff was entitled to a fee for its services.

As was noted by the district judge, in his oral ruling on the motion for directed verdict, the pretrial admission and the undisputed facts adduced at trial eliminated all litigable question on the liability of defendant to pay a fee.

Defendant argues that plaintiff’s prior dealings with C.C.S.C. in looking for a loan for it, require the plaintiff to look to C.C.S.C. for its finder’s fee instead of defendant. In support of this contention, defendant cites Bloomgarden v. Coyer, 156 U.S.App.D.C. 109, 479 F.2d 201 (1973). In that case the plaintiff sought a finder’s fee for having brought together two parties who formed an enterprise for land development. There was evidence there, however, that his reason for doing so was to promote an enterprise that would produce future business for the company that he worked for, and not for a finder’s fee. Haven-field, on the other hand, is in the business of, among other things, bringing parties together for the purposes of mergers and acquisitions. While defendant is entitled to have disputed facts resolved in its favor for purposes of a directed verdict, it is not entitled to unreasonable inferences, nor to have the court draw inferences that are at war with undisputed facts. Lewis v. Nelson, 277 F.2d 207 (8th Cir. 1960).

The jury was given two instructions on the measure of damages:'

Therefore, if you find that the plaintiff has proven by the evidence the following:
1. during the time plaintiff rendered to defendant and defendant accepted the services of plaintiff in identifying C.C.S.C. as a business opportunity for acquisition by defendant, furnished financial data on C.C.S.C. to defendant, arranged and attended the meeting in Columbus, Ohio, of March 24, 1971, and introduced representatives of plaintiff and defendant at said meeting;
2. thereafter offered its banking services in the acquisition of C.C.S.C. by defendant;
3. C.C.S.C. was acquired on January 26, 1972, by defendant at a price in stock of defendant valued at $3,000,-000;
4. during 1970, 1971, and 1972 there was a prevailing usage, custom and practice in the investment banking business in the United States that finder’s fees of investment bankers in identifying business opportunities for corporate acquisition, furnishing financial data thereon, arranging and attending a meeting of the parties to the potential acquisition, introducing them, be fixed on a declining percentage formula of 5-4^3 — 2—1 [677] or other such formula, contingent upon the making of the potential acquisition;
5. plaintiff and defendant in 1970, 1971 and early 1972 knew of such usage, custom and practice, or
6. such custom[,] usage, and practice was generally known by parties in circumstances similar to plaintiff and defendant;
7. neither party to this action knew or had reason to believe that the other intended to exclude fixing of the finder’s fee by such usage, custom or practice, then in such circumstances under the law the defendant became obligated to pay to the plaintiff a finder’s fee determined by application of the declining percentage formula under the prevailing usage, custom and practice as you may find it from the evidence.
[C-7] If you should find that under the law and the evidence the plaintiff is not entitled to recover damages in the form of a contingent finder’s fee fixed by a usage, custom and practice of the investment banking industry, then you should award to the plaintiff as damages the reasonable value of the services rendered by plaintiff to defendant in identifying the business opportunity [678] to acquire C.C.S.C., the furnishing of financial data concerning C.C.S.C., the arranging and attending the meeting between defendant and C.C.S.C. of March 24, 1971, in Columbus, Ohio, and the introduction by plaintiff of C.C.S.C. to the defendant at that meeting.
In determining the value of the services of the plaintiff you may take into consideration, among other facts in evidence, the following:
1. the contingent nature of the obligation of the defendant to pay the plaintiff for its services;
2. the value to the defendant of the idea for and identification of C.C. S.C. as a business opportunity for acquisition by the defendant;
3. the value to the defendant of the arrangement of the meeting with C.C.S.C. on March 24, 1971, at Columbus, Ohio;
4. the attendance of plaintiff at that meeting and introduction by plaintiff of C.C.S.C. to the defendant at that meeting;
5. the fact that the business opportunity to acquire C.C.S.C. was consummated by the acquisition of C.C.S.C. by defendant;
6. the amount of the purchase price paid by the defendant in its stock for the acquisition of C.C.S.C.;
7. the amount of time of the officers and employees [679] of plaintiff expended in rendering the services to the defendant; and
8. the offer of availability of the plaintiff to render investment banking services in the consummation of the acquisition.
After considering these matters, and all other facts you find from the evidence, you shall determine the damages of the plaintiff to be the reasonable value of the services so rendered by plaintiff to defendant, unless you find under the law as stated in this charge the damages should be fixed under the alleged prevailing usage, custom and practice of the industry.

The first instruction would be the proper measure under a contract implied-in-fact, if there is a customary fee in the particular business involved, Hill v. Waxberg, 237 F.2d 936, 16 Alaska 477 (9th Cir. 1956), which the jury was first required to find. The second would be applicable where there is no customary fee. The defendant has argued that the giving of both instructions amounted to an improper mixing of the theories of implied-in-fact and implied-in-law (quasi) contracts. However, there is ample evidence about customary fees to entitle plaintiff to an instruction on them, and the second instruction is the same measure to which the defendant has admitted the extent of its liability. It cannot now say it is improper.

In light of the defendant’s admission and the undisputed evidence, it cannot be held that the district court erred in directing a verdict for plaintiff on the issue of liability.

III.

Defendant’s third contention is that the district court erred in refusing to allow defendant to file supplemental answers to plaintiff’s interrogatories, and in not admitting evidence relating to those answers.

The supplemental answers were stricken because they were submitted after discovery had been closed, pursuant to Local Rule 20 of the District Court for the Western District of Missouri. Under that rule, supplemental answers are prohibited after the close of discovery, unless filed with leave of court for good cause shown. Defendant claims that it did not need to obtain leave of court because the supplemental answers were filed pursuant to Rule 26(e), Fed.R. Civ.P., which was exempted from the Local Rule 20 limitation by pretrial order. Defendant also contends that since Rule 26(e) imposes a duty upon parties to file supplements to discovery, leave of court is not required.

The substance of the supplemental answers is a basic change in the defendant’s contentions on the issue of liability, and is an attempt to relieve itself from the impact of the admission of liability contained in its original answers. The new claim is that plaintiff was acting on behalf of C.C.S.C. in the transaction and should look to C.C.S.C. for any finder’s fee due it. Defendant claims that it did not have any information on which to base this claim until it took Polite’s deposition on March 13, 1973, and, therefore, could not have made this contention in the original answers which were filed on that same day.

At that time, the close of discovery was set at March 15, 1973. On March 16, it was extended to May 15, 1973, and later to May 30, 1973, which was the final date. The issue is whether these supplemental answers are of such a nature that they come within the scope of Rule 26(e). The pertinent parts of the rules state:

Supplementation of Responses. A party who has responded to a request for discovery with a response that was complete when made is under no duty to supplement his response to include information thereafter acquired, except as follows: .
A party is under a duty seasonably to amend a prior response if he obtains information upon the basis of which (A) he knows that the response was incorrect when made, or (B) he knows that the response though correct when made is no longer true and the circumstances are such that a failure to amend the response is in substance a knowing concealment.

The duty imposed by this rule requires a party to disclose newly discovered facts which render a prior answer either incorrect or incomplete. Defendant claims that the newly discovered facts in Polite’s deposition make its prior answers incorrect. However, before any duty arises, it must also be shown that the failure to disclose the new facts would amount to a knowing concealment. In this case, the new facts were discovered from a former employee of plaintiff, and pertained to his actions on behalf of plaintiff, so failure to disclose these facts to the plaintiff does not come within the definition of a knowing concealment. The case cited by defendant, Greyhound Lines, Inc. v. Miller, 402 F.2d 134 (8th Cir. 1968), is a prime example of that with which the rule is designed to deal. In that case the plaintiff had failed to disclose certain medical records after the defendant had obtained an order requiring disclosure of all medical records. It is the new facts that the rule seeks to bring out in the open, not new contentions which may be based upon allegedly new facts.

There is also a requirement that any amendments be made seasonably. The defendant had two and one-half months from the time it got the new information from Polite until the final closing of discovery, and waited another five or six weeks after that before filing the supplemental answers. This was clearly not acting seasonably. Defendant argues that it was not until final preparations for trial that counsel for defendant fully appreciated the significance of the new facts. This excuse is neither convincing nor valid. The defendant’s counsel was aware that discovery would close on May 30, 1973, and must implicitly be held to some duty to evaluate the evidence and prior discovery to determine if any further discovery was needed. This is not a case like Greyhound, supra, where the new facts were not discovered until after the close of discovery. For purposes of determining timeliness in procedural matters of this sort, the beginning time is the date when the facts are discovered, not some nebulous date when counsel first realized that there was some significance to them. To adopt such a standard as the defendant suggests would throw the procedural rules of the courts into a state of utter confusion.

The district judge did not abuse his discretion by not allowing the untimely raising of new issues by defendant.

In accordance with this ruling, the refusal to allow evidence on this issue was also not error. Parties need not be allowed to bring in through the back door those issues which they were too late in bringing to the front. This court held in the Greyhound case that it was within the discretion of the trial court to control the timetable for discovery, and that Local Rule 20 was proper under Rule 83, Fed.R.Civ.P., with a purpose of timely formulation of issues to be tried.

IV.

Defendant’s fourth claim of error is that the district judge abused his discretion in disqualifying one of the defendant’s proposed expert witnesses. Defendant sought to have one J. Wesley Hickman testify about customary fees paid to finders in corporate acquisitions. Plaintiff objected on the grounds that Hickman had never acted on behalf of a buyer in such transactions but only for sellers, and also that the witness had only dealt with one such transaction since 1967. The district judge sustained the objection on the basis of having represented only sellers, and disqualified the witness. Defendant contends that there is no difference between representing a buyer and a seller and, therefore, the disqualification is an abuse of discretion.

It is well settled in Missouri and in this circuit that the trial judge is given broad discretion in determining the qualifications of proposed expert witnesses, and that these rulings are to be overturned only if there is an abuse of discretion or clear error of law. State ex rel. State Highway Commission v. Heim, 483 S.W.2d 410 (Mo.App.1972); Love v. United States, 141 F.2d 981 (8th Cir. 1944).

There is nothing in the record to show whether there would be a difference between representing the buyer and the seller in such transactions. However, defendant’s other expert witness testified that there would be a difference in the fee where a finder was acting on an idea initiated by him rather than on a request from a client that he seek possible acquisition candidates. It is apparent from this that all finder’s fees are not the same. It is important that expert witnesses have experience in transactions that are as similar as possible to the transaction upon which they are being asked to comment. In light of Mr. Hickman’s limited experience in the role of finder, and absent any showing that the fee would be the same no matter which side was being represented, this court is not prepared to second-guess the district judge who was much closer to the situation. There is no clear error of law found here, and no abuse of discretion.

For the foregoing reasons, the judgment of the district court is affirmed.


author: PER CURIAM.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Hobert Puryear KEEN, Defendant-Appellant.
    No. 74-1743.
    United States Court of Appeals, Sixth Circuit.
    Feb. 5, 1975.

      Richard H. Lewis, Lovett, Lewis, Johnson & Shapiro, Benton, Ky., William E. Scent, Keith, Scent, Osborne & Deatherage, Hopkinsville, Ky., for defendant-appellant.
    George J. Long, U. S. Atty., James H. Barr, Louisville, Ky., for plaintiff-appellee.
    Before CELEBREZZE, PECK and McCREE, Circuit Judges.
   PER CURIAM.

This is an appeal from a jury conviction of receiving stolen government property in violation of 18 U.S.C. § 641. Appellant does not contend that the evidence was insufficient to permit the jury to return a verdict of guilty but seeks reversal of his conviction on the grounds that the government improperly employed subpoenas for the purpose of commanding the attendance of prospective witnesses at a unilateral pretrial interview.

In preparation for the trial, the government attorney obtained blank subpoenas from the district court clerk and issued them to prospective trial witnesses commanding attendance at a pretrial interview at his office. When appellant discovered that the government had caused subpoenas to be served for this purpose, he sought an order permitting him to subpoena the same witnesses for a pretrial interview or, alternatively, to require the government to furnish him copies of all written statements given by the witnesses or summaries of the interviews. The district court, in denying the motion, stated, “This has been a long-standing practice within the Department of Justice which we will allow until directed to do otherwise by a higher court.”

Appellant contends that he was prejudiced by this abuse of the subpoena power in three ways: (1) that his former wife was asked questions based upon the pretrial interview for the purpose of impeaching her testimony; (2) that, like his co-defendant, he might have pleaded guilty to the charge and might have received a sentence less severe than eighteen months had he been permitted to attend the pretrial interview; and (3) that a preview of the witnesses’ testimony would have furnished him grounds for moving for a severance of trial on one count of the indictment.

There is no question that the government’s action of obtaining blank trial subpoenas from the court clerk and of using them to compel witnesses to attend an interview miles from the place of trial and at a proceeding other than an authorized one was highly improper. Rule 17 of the Federal Rules of Criminal Procedure provides, in relevant part,

“(a) ... A subpoena shall be issued by the clerk under the seal of the court. It shall state the name of the court and the title, if any, of the proceeding, and shall command each person to whom it is directed to attend and give testimony at the time and place specified therein. The clerk shall issue a subpoena, signed and sealed but otherwise in blank to a party requesting it, who shall fill in the blanks before it is served.
(c) . . . The court may direct that books, papers, documents or objects designated in the subpoena be produced before the court at a time prior to the trial or prior to the time when they are to be offered in evidence and may upon their production permit the books, papers, documents or objects or portions thereof to be inspected by the parties and their attorneys.”

This rule permits a subpoena ad testificandum or a subpoena duces tecum to be issued only for the purpose of compelling the attendance of witnesses or the production of evidence at a formal proceeding. Only in the case of a subpoena duces tecum may the court direct that the evidence subpoenaed be produced for inspection before trial or before it is to be offered in evidence. The government’s action was clearly unauthorized and improper. United States v. Hedge, 462 F.2d 220 (5th Cir. 1972). See also United States v. Standard Oil, 316 F.2d 884 (7th Cir. 1963); United States v. Stirone, 168 F.Supp. 490 (W.D.Pa.1957).

We do not, however, reverse appellant’s conviction. He does not offer any explanation why a severance of a single count of the indictment would have been requested or granted had he been permitted to attend the pretrial interview. Moreover, there is no reason to believe that appellant would have pleaded guilty and would have received a less severe sentence had he been permitted to attend the pretrial interview. We do believe, however, that the government’s attempted impeachment of appellant’s former wife based upon statements that she allegedly made at the pretrial interview was prejudicial. A short excerpt from the government’s examination of this witness is sufficient to show the dangers inherent in the impermissible subpoena practice engaged in by the Department of Justice in this case:

Q. Were you — have we talked before about this case?
A. You and I?
Q. Yes.
A. Yes Sir.
Q. Uh, did you give any different answers at that time than you did just then?
A. No.
Q. Are you sure of that?
A. Positive.
* * * * * *
Q. Did you not say to him that you would positively not go the the Fort Campbell area with him again because you believed that these field jackets purchased by your husband were stolen?
A. No, I did not.
Q. You did not say that to Agent Hilliard Thorpe of the FBI?
A. No Sir; I did not.
Q. And you are telling the truth right now?
A. Yes Sir; I am.
Q. Are you aware of what the word “perjury” means?
A. Yes Sir; I am.
Q. Well, did you tell the truth to Agent Thorpe when you were interviewed by him?
A. Yes Sir.
Q. Did you not tell me last Tuesday, the nineteenth of March, that you inquired of your husband as to whether these jackets were stolen?
A. I just told you now I did.
Q. Okay; and what did he say?
A. He said they were not.
Q. And did you not tell him that you wouldn’t go with him anymore because you thought the jackets were stolen?
A. I did not.
Q. Did you not tell Agent Thorpe that and did you not tell me that on the nineteenth?
A. I did not tell you that, no Sir; I didn’t.
Q. And I would be lying then if I said you did, and Agent Thorpe would be lying if he said you did; is that correct?
A. Yes Sir.
Q. Did you not say to Agent Thorpe that you believed that the field jackets were very likely stolen due to the circumstances under which your husband bought them?
A. No Sir; I told him I had no way of knowing if those field jackets were stolen.
Q. Didn’t you tell him that you believed due to the circumstances that those jackets were stolen.
A. No Sir; I told him I didn’t like the way the field jackets were bought.
Q. You didn’t — you didn’t mention the word “stolen”?
A. No Sir.
Q. That you thought they were stolen?
A. No Sir; I told him I had no way of knowing.
Q. And you didn’t tell me that then on the nineteenth of March when we talked?
A. No Sir.
Q. And if I said you did I’d be lying and if Agent Hilliard Thorpe said you did, he’d be lying; is that correct?
A. Yes Sir.
Q. So, you are telling the truth and both of us have lied or would lie twice then; is that correct?
A. I’m telling you the truth.

Even though we find that appellant was prejudiced in this respect, he made no objection to the testimony. Accordingly, appellant must be deemed to have waived the error which we regard as harmless in light of the other abundant evidence of guilt. Cf. United States v. Hedge, supra.

Affirmed.