The past year saw a number of criminal defendants argue that the rule of reason applies to restraints long condemned as categorially illegal. Each defendant’s challenge to the application of the per se rule was ultimately rejected.
Kemp & Mannix
Photo credit: Casper1774Studio/iStock/Getty Images Plus
In August 2016, a grand jury indicted a Salt Lake City-based heir location services provider and its co-owner for participating in a conspiracy to allocate customers with another heir location firm. In June 2017, the district court ruled the customer allocation alleged in the indictment would be tried under the rule of reason. Later that summer, the district court granted defendants’ motion to dismiss the indictment on statute of limitation grounds. The United States appealed both decisions to the Tenth Circuit, where Principal Deputy Assistant Attorney General (PDAAG) Andrew Finch argued the case before the three-judge panel.
In October 2018, the Tenth Circuit reversed the district court’s dismissal and found the indictment timely. The Tenth Circuit ruled it did not have jurisdiction to address the application of the rule of reason, but encouraged the district court to “reconsider its rule of reason order” now that the issue had been “more fully explored” with “the benefit of detailed briefing.” United States v. Kemp & Assocs., Inc., 907 F.3d 1264, 1278 (10th Cir. 2018).
The Division asked the district court to reconsider its rule of reason order in light of the Tenth Circuit’s guidance. In February 2019, the district court reconsidered and found “the agreement in the present case is a horizontal customer allocation agreement” that is “subject to the Per Se approach.” United States v. Kemp & Assocs., Inc., 16-cr-403, 2019 WL 763796, at *3 (D. Utah Feb. 21, 2019). Trial has been set for October 15, 2019.
Photo credit: Feverpitched/iStock/Getty Images Plus
Like Kemp and Mannix, certain defendants in the Division’s prosecutions of bid rigging at foreclosure auctions—which have resulted in convictions of 136 individuals, including 12 defendants found guilty at trial—also challenged the application of the per se rule to their conduct.
For example, Thomas Joyce appealed his conviction at trial for conspiring to rig bids at foreclosure auctions in California. Joyce argued that the district court erred by applying the per se rule to bid rigging and “refusing to admit evidence that allegedly shows the procompetitive benefits of his conduct.” United States v. Joyce, 895 F.3d 673, 676 (9th Cir. 2018). In July 2018, the Ninth Circuit affirmed Joyce’s conviction and rejected both arguments. The Court held that bid rigging is “a per se violation of the Sherman Act,” id. at 677, and the district court appropriately refused “to permit Joyce to introduce evidence of the alleged ameliorative effects of his conduct.” Id. at 679.