Opinion
01 CR 429 (GBD).
April 11, 2002.
MEMORANDUM DECISION ORDER
Defendant A. Alfred Taubman moves for a new trial, pursuant to Federal Rule of Criminal Procedure 33, arguing that two rulings by the Court during trial were error requiring a new trial. Defendant contends that those two rulings in combination substantially limited his ability to respond to the Government's arguments regarding twelve meetings between himself and codefendant Sir Anthony Tennant, and created an unacceptable risk that the jury would impermissibly conclude that the mere fact of these meetings was itself sufficient proof of Taubman's guilt.
Defendant A. Alfred Taubman was tried separately, since codefendant Anthony Tennant, a citizen and resident of England, has not appeared in this case in response to the charged indictment against him.
The first ruling alleged to be error was the Court's decision not to give Defendant's Request to Charge, No. 9, entitled Knowing and Intentional Participation: Meetings and Communications between Competitors. That proposed jury charge which would have in essence instructed the jury that since "competitors may have legitimate and lawful reasons to have contact with each other . . .," the jury "may not infer that Mr. Taubman knowingly and intentionally joined the conspiracy solely from the fact that he had meetings or other contacts with Christie's or participated in exchanges of information with Tennant." The second alleged error is argued to be the Court's ruling permitting the Attorney for the Department of Justice to quote the eighteenth century economist Adam Smith in his summation. In closing argument, the Government quoted Adam Smith as saying "People in the same trade seldom meet together even for merriment or diversion, but the conversation ends in a conspiracy against the public and in some contrivance to raise prices." (Tr. at 1985-86).
From the very beginning of the trial and throughout, there was no dispute that a conspiracy existed to fix seller's commission rates charged to customers of Sotheby's and Christie's. By its very nature, the members joined that conspiracy with the intent to unreasonably restrain competition between the two auction houses. Sotherby's CEO Diana (Dede) Brooks and Christie's CEO Christopher Davidge both admitted and chronicled a series of meetings between them, over a period of years, in which they negotiated and executed the details of that illegal conspiracy.
The only disputed element of the charged offense was whether the defendant A. Alfred Taubman knowingly and intentionally became a member of that conspiracy. The direct evidence presented by the Government was the testimony of both Brooks and Davidge that Taubman and Tennant, the chairmen of Sotherby's and Christie's respectively, met with one another on several occasions and agreed to eliminate competition on a number of levels, including fixing sellers commission prices. Both Brooks and Davidge unequivocally testified that they were directed by their respective chairmen to work out the specifics of the illegal agreement.
To corroborate this direct testimonial evidence, the Government presented testimony and records concerning meetings between Taubman and Tennant, as well as notes reflecting some of the topics discussed at some of these meetings. Both Brooks and Davidge testified that during the course of these meetings, there were discussions formulating, and in furtherance of, the charged conspiracy. The Government introduced a number of calendars and itineraries which established that Taubman and Tennant met on twelve occasions on the following dates: February 3rd, April 1st, April 30th, and September 7th of 1993; January 12th, March 9th, June 23rd and November 28th of 1994; June 19th and October 19th of 1995; and April 11th and October 31st of 1996.
Taubman's personal assistant, Melinda Marcuse testified that Tennant would call her to arrange meetings with Taubman. (Tr. at. 185-86). She entered Tennant's name in the calendars in a cryptic manner because she feared that such private meetings between Taubman and Tennant might be "misconstrued" given the fact that they were "the two chairmen of two competing auction houses." (Tr. at 191-94). Ms. Marcuse considered it her "job to protect Mr. Taubman's privacy." (Tr. at 193). The calendars and itineraries contain forty-one references to defendant's meetings with Tennant, but only eight of those entries identify Tennant by that name. (Government exhibits 64, 69(a), 70(a), 71(a), 72(a), 87 (a), 90(a), and 93(b)). All other entries either indicated that defendant had a meeting without a notation as to whom defendant was meeting with, or it refers to Tennant as the "gentleman," "Sir Anthony," "Sir A,""Tony," and on one occasion as "meeting with *** at flat." (Government's exhibits 60-63, 65-67, 68 (a-c), 71 (b-d), 81-84, 85 (a-d), 86 (a-b), 87 (b-d), 88 (a-b), 89 (a-b), 91(a), 92(a), and 93 (a)).
The defendant requested that the jury be specifically instructed that "[e]vidence of meetings . . . between Mr. Taubman and Anthony Tennant and between Mr. Taubman and Diana Brooks does not by itself prove that Mr. Taubman was a participant in a conspiracy or that he had the required knowledge and intent." The defense claims that the requested charge was necessary in light of the Government's focus on the fact that these twelve meetings took place between defendant Taubman and Tennant. Defendant further argues that the Government sought to create the impression that there was no permissible reason for Tennant and Taubman to be communicating. According to the defendant, the risk that the jury might make the impermissible leap from the mere fact of the meetings to Taubman's guilt was exponentially increased when the Government decided to quote Adam Smith in its summation. Therefore, he contends that the proposed charge was necessary to prevent the jury from impermissibly concluding that defendant was guilty solely because he met with Tennant on several occasions. Absent the instruction, the defendant claims that the jury was "left to its own devices in considering either (1) whether the Tennant/Taubman meetings were permissible in the first instance, or (2) whether they constituted sufficient circumstantial evidence of Taubman's knowing and intentional participation in the alleged conspiracy." (Def.'s Reply Mem. at 4).
DAVIDGE TESTIMONY
At trial, Christopher Davidge testified that in 1993, Tennant informed him that soon after Tennant's appointment as chairman of Christie's in September of 1992, Taubman contacted Tennant to congratulate him. (Tr. at 305-306). Taubman told Tennant that he did not believe that Tennant's predecessor was focused on the bottom line. (Tr. at 306). Taubman extended a number of invitations to Tennant to meet with him. (Tr. at 305). Tennant told Davidge that the two chairmen had met, but Davidge did not know the dates of these initial meetings. (Tr. at 528, 535). Tennant told Davidge that at one of the meetings, Taubman gave Tennant Government exhibit 94, a document detailing certain of Christie's sales to demonstrate that Christie's was not making sensible and profitable deals. (Tr. at 306-307).
Government's exhibit 94 was identified at trial by Melinda Marcuse, as a detailed list of sales at Christie's and Sotheby's that was dictated to her by Brooks during a meeting with Taubman at his office. (Tr. at 219-21). Although Ms. Marcuse, who began her employment at Sotheby's in the latter part of March 1993, could not recall the exact date when this list was created, she did know that it was "early on" in her employment with Sotheby's. (Tr. at 176, 220).
Tennant gave Government exhibit 94 to Davidge, who investigated the details set forth therein, and placed his findings in a memorandum dated April 8, 1993. (Tr. at 308). Tennant told Davidge that he would use Davidge's memorandum, Government's exhibit 28, at the next meeting Tennant planned to have with Taubman. (Tr. at 307-10). Davidge voiced his concerns about having a "close relationship with Sotheby's" because "traditionally [they] kept Sotheby's at arm's length." (Tr. at 310). Tennant assured him, however, that "a close relationship with one's competitor was to everyone's advantage" because "it took out a level of competition which was unnecessary." (Tr. at 310-11). Davidge then prepared an agenda for his next meeting with Tennant which occurred on April 16, 1993. (Tr. at 311). That agenda, Government exhibit 29, addressed a number of issues that Tennant indicated to Davidge that Taubman had brought to Tennant's attention. Those issues included: hiring of the other's employees; quoting of false market shares, disparaging comments, and non-recourse loans. (Tr. at 311-320). Tennant told Davidge that Tennant would be going over the information he received from Davidge at Tennant's next meeting with Taubman. (Tr. at 330).
Taubman and Tennant met on the morning of April 30, 1993. (Tr. at 331). Tennant and Davidge met that very same afternoon. (Tr. at 331-32). Tennant informed Davidge that Taubman and Tennant had a "very good meeting." (Tr. at 332). Tennant provided Davidge with a written three page summary of the two chairmen's conversations. (Tr. at 332). Tennant believed it would give Davidge some idea of what they had "agreed." (Tr. at 332). Tennant indicated that the document, Government exhibit 48, was a "full and frank summary of his meeting [with Taubman] earlier in the day." (Tr. at 334). The document begins with language in quotes.
Tennant told Davidge that the quoted statements were made by Taubman. (Tr. at 626-27). The document then reads, "This copied verbatim."
Davidge understood the quoted portion reflected certain topics that Taubman and Tennant had specifically agreed to: no more disparaging comments; cease making market share claims; no straight guarantees; no advances on single lots; no loans below LIBOR; trade vendors would not get a commission rate better than five percent, and pay their own insurance; no offers of more than 90 days credit to trade buyers; introductory commissions to third parties would not exceed one percent of the premium where there was no vendor's commission; no offers to vendors already contracted; cooperating on heritage issues, credit control, and introductory commissions to intermediaries; and cease making charitable donations. (Tr. at 335-42).
Davidge testified that the portion of Tennant's April 30th meeting summary which read, "A schedule exists. We should get back to it. 15% downward on a sliding scale." refers to the companies' published scale of fees for the seller's commission. (Tr. at 342). He further explained that the sentence which reads, "They are considering publishing a scale as with the buyer's premium," meant that Tennant and Taubman had "discussed the possibility of producing a scale which would be the same as the buyer's premium which would be not negotiable." (Tr. at 343). The summary goes on to state, "If anyone wants to bargain on their new scale they will tell them to go elsewhere." Davidge understood that this sentence "was emphasizing the point that if people didn't accept the fixed nature of the commission rates, that they wouldn't be willing to bargain and that their reply to their clients of Christie's and Sotheby's should be `I am sorry, that is our rates and you have to accept it. If you don't like it, then find another auction house.'" (Tr. at 343). The April 30th summary ended with "He and I should now withdraw but stay in touch with a view to seeing how things go and intervening from on high if need be." Davidge understood this to mean that the "platform for these agreements had been laid by Mr. Tennant and Mr. Taubman," and that Davidge and Brooks would be responsible for implementing them. (Tr. at 344).
Tennant told Davidge that there was an agreement to achieve a non-negotiable seller's commission. (Tr. at 705). Davidge was instructed to "work on a program on the basis of a fixed vendor's commission basis which [Tennant] would like adopted before the end of `93, and that it would be Christie's turn to go next on making an announcement about the change in the commission structures." (Tr. at 344). Davidge understood that "The core of the April 30th agreement was maximizing vendor's commissions." (Tr. at 706-707). He was instructed by Tennant to work out the details of all agreements with Brooks. (Tr. at 335, 346-47). Tennant indicated that "the major issue to work on was the issue of non-negotiable vendors' commissions." (Tr. at 349). Davidge was told that Brooks would contact him directly on behalf of Sotheby's. At the chairmen's April 30th meeting, Tennant had given Taubman the telephone number to Davidge's London flat so that Taubman could pass it on to Brooks. (Tr. at 346-47).
Tennant had also instructed Davidge that "obviously this is a sensitive matter and that it would be wise to keep it to the four of us." (Tr. at 811). Tennant indicated to Davidge "that it was in everyone's best interests if only he and [Davidge] knew about this and he felt that was the way it should be at Sotheby's, that only Mr. Taubman and Ms. Brooks should know about it." (Tr. at 349-50).
Davidge did, thereafter, receive a telephone call from Brooks. (Tr. at 351-52). They arranged to meet a few weeks later in a London hotel. (Tr. at 352-53). Brooks was uncomfortable at the meeting but, in a clear reference to Taubman, told Davidge that "she felt that it would be disloyal to the chairman not to go ahead with his request." (Tr. at 353). Davidge and Brooks discussed a number of issues including guarantees, zero commission on commission rates, and disparaging comments. (Tr. at 354). The two agreed to meet again. (Tr. at 354). Davidge reported the substance of this meeting to Tennant. (Tr. at 354). Tennant was not surprised that Brooks "had been informed on the same basis" as Tennant had informed Davidge. (Tr. at 355). Tennant told Davidge to keep him informed of his next meeting with Brooks. (Tr. at 355).
Not long after that first meeting, Davidge met with Brooks at her London apartment where they had a further discussion in greater detail. (Tr. at 355). With respect to the seller's commission, Brooks confirmed to Davidge that she had been told by Taubman that it was incumbent upon Christie's to revise the existing seller's commission first, and that the new seller's commission would be non-negotiable. (Tr. at 361-62). They agreed that their respective instructions from Taubman and Tennant to have the seller's commission rate agreement in place by autumn of 1993 was unrealistic. (Tr. at 366). Davidge reported the substance of this meeting to Tennant. (Tr. at 365). Davidge told Tennant that the seller's commission could not be effectuated by 1993, to which Tennant expressed his disappointment. (Tr. at 365-66). Tennant told Davidge that he was going to keep in touch with Taubman. (Tr. at 366).
Davidge estimated that he met with Brooks between eight to ten times to talk about similar topics as their earlier meetings. (Tr. at 369). They "discussed [their] respective chairman on a number of occasions, that [Taubman and Tennant] were continuing to meet," which Davidge and Brooks both thought was not a good idea. (Tr. at 371). On one occasion, Tennant told Davidge that Tennant was going to New York to give Taubman an update on the progress of Davidge's discussions with Brooks. (Tr. at 366). Brooks told Davidge that she had warned Taubman that she "thought it was a very bad idea for him to be meeting with Mr. Tennant and certainly meeting in his office, that that could cause a lot of problems if people found out." (Tr. 390).
Tennant had also suggested to Davidge a meeting with Taubman, Tennant, Brooks and Davidge because Tennant "wasn't happy with the progress and felt that [they] were delaying things on the non-negotiable vendor's commission." (Tr. at 372). Brooks and Davidge both rejected the idea of a meeting of the four conspirators. Davidge assured Tennant that Brooks and Davidge were "working as diligently as [they] could on coming up with a formula and a timing on the non-negotiable commission." (Tr. at 372).
When the non-negotiable seller's commission plan was almost finalized, Davidge flew to New York. (Tr. at 372-73). He met with Brooks in her automobile parked at Kennedy Airport, and showed her Christie's anticipated press announcement and other supporting documents. (Tr. at 373). This meeting took place approximately four to six weeks prior to Christie's formal announcement in March of 1995. (Tr. at 373). Brooks found the proposed press release to be "consistent with [their] previous conversations." (Tr. at 374). She told Davidge that she would wait until Christie's made its formal announcement before she raised the issue of a similar change of the seller's commission rate internally at Sotheby's, but that she obviously had the support of Taubman. (Tr. at 374). When Davidge informed Tennant as to the substance of this meeting, Tennant said, "Finally, that's good, excellent. We now wait on Sotheby's." (Tr. at 375). The Finance Department at Christie's calculated the anticipated yearly benefit of the new seller's commission rate to be twelve to fifteen million dollars for Christie's, and almost eighteen million dollars for Sotheby's. (Tr. at 392).
A few weeks after Christie's formal announcement, Sotheby's made its announcement about a change in the seller's commissions which Davidge found to be substantially in accordance with his discussions with Brooks. (Tr. at 379-80). In May of 1995, Christie's made another announcement concerning the seller's commission rates which set forth certain changes in some of the scales so as to fit more in line with the Sotheby's announcement. (Tr. at 381). Therefore, by September of 1995, as agreed to in conversations between Taubman, Tennant, Brooks and Davidge, Christie's and Sotheby's were essentially charging the same seller's commissions rates and those rates were non-negotiable.
BROOKS TESTIMONY
Brooks testified that on what she believed was April 30, 1993, Taubman summoned her into his office. (Tr. at 829-30, 987-92, 1070). He told her he had just had a "very good meeting" with Tennant. (Tr. at 831). Taubman said that "he and Mr. Tennant had gotten along very well and he could see working with him." (Tr. at 831-32). Taubman told Brooks that he and Tennant were in agreement that they "were both killing each other on the bottom line and that . . . it was time to do something about it." (Tr. at 830). Taubman showed Brooks a small piece of paper which listed a number of topics in his own handwriting. (Tr. at 832). The first topic was pricing, and it went on to list other matters such as guarantees and interest-free advances. (Tr. at 832).
Taubman also spoke to Brooks regarding other topics which may or may not have been recorded on his note. (Tr. at 832). He told Brooks that he and Tennant had already agreed on a number of subjects. (Tr. at 832). Taubman and Tennant wanted Brooks to meet with Davidge to implement those agreements. (Tr. at 832). It was Brooks' responsibility to contact Davidge. (Tr. 833). As to those agreements that were not finalized, Taubman instructed that Brooks and Davidge were to work out the details. (Tr. at 832). With respect to the first issue on his note, i.e, pricing, Taubman told Brooks that "he and Mr. Tennant felt that it was time to increase pricing" and that "he had told Mr. Tennant that it was their turn to go first." (Tr. at 833). The other agreements concerned such areas as: guarantees, interest free or single lot advances, no disparaging remarks, the quoting of market share, no poaching of the other's staff, introductory commissions, and charitable contributions. (Tr. at 833-34). Taubman instructed Brooks not to tell anyone about the agreements. (Tr. at 832, 834).
Brooks met with Taubman the following week, and once more went over the subject matters upon which Taubman and Tennant had agreed. (Tr. at 835-36). On the issue of pricing, Taubman reiterated to Brooks that "Sotheby's bottom line was being killed . . . and that [they] were going to have to increase pricing given the level of the market." (Tr. at 836). Brooks told Taubman that she was pleased that he had told Tennant that it was Christie's turn to increase the pricing first, before Sotheby's did. (Tr. at 838). Brooks acknowledged to Taubman that she knew it was her responsibility to now get in touch with Davidge. (Tr. at 838). The meeting ended with a discussion that Taubman and Brooks "would have to see whether or not [they] could work with [Tennant and Davidge], and trust them enough to actually come up with some plans that would actually work." (Tr. at 838). Taubman telephoned Brooks on a number of occasions to find out if she had met with Davidge yet, which she had not. (Tr. at 839).
Brooks did contact Davidge as instructed by Taubman, and arranged a meeting in a private dining room at a hotel in London. (Tr. at 838, 840). She advised Taubman of this up-coming meeting, and he was pleased that Brooks and Davidge were "finally going to meet." (Tr. at 839-40). At that first meeting between Brooks and Davidge, they "talked about the fact that Mr. Tennant and Mr. Taubman wanted [them] to meet with one another and get to know each other, and to work through a number of agreements [Taubman and Tennant] had made, and also to work on some of the issues that [Taubman and Tennant] had talked to each of [them] about." (Tr. at 841). Brooks told Davidge that since they would be directly working together, the information coming from Taubman would be relayed to Davidge via Brooks. (Tr. at 842). Brooks and Davidge were able to agree on several competitive issues, including that there would be no quoting of market share, no disparaging remarks, and that they would work on creating a guarantee formula. (Tr. at 842-43).
Since Taubman had told Brooks that it was Christie's turn to go first, she anticipated Davidge coming to this meeting already prepared to increase pricing. (Tr. at 843). Davidge explained that he wanted to be careful because Sotheby's and Christie's had just increased pricing the year before by raising the buyer's premium. (Tr. at 843). Davidge wanted to work with Brooks in devising the best way to increase pricing. (Tr. at 843). They decided to meet again to discuss certain topics in detail such as the guarantee formula and the introductory commission. (Tr. at 844). Brooks telephoned Taubman to report that she met with Davidge as instructed, and that she and Davidge were going to be working on the agreements that Taubman had made with Tennant. (Tr. at 844-45). Taubman was glad that they "were actually going to make some progress." (Tr. at 845).
The next meeting with Davidge occurred in either December of 1993 or the early part of 1994, at Brooks' London apartment. (Tr. at 846). They again discussed "the topics that Mr. Tennant and Mr. Taubman had instructed [Brooks and Davidge] to talk about." (Tr. at 846). This included such agreements as: guarantees, interest-free loans, single-lot advances, introductory commissions, loans below LIBOR, and charitable contributions. (Tr. at 847-48). Brooks and Davidge "actually agreed on a number of topics in terms of how [they] were going to implement what Mr. Taubman and Mr. Tennant had told [them] to do." (Tr. at 846). Brooks and Davidge continued to work on their superiors' agreement to fix prices, but more work needed to be done to institute a non-negotiable seller's commission. (Tr. at 849-50). Brooks spoke with Taubman and gave him an update regarding this subsequent meeting. (Tr. at 848-49). She specifically informed him that she and Davidge had agreed on a plan of action with regard to all of Taubman and Tennant's other agreements, but "were still working on the pricing." (Tr. at 849). Taubman again expressed his satisfaction that Brooks and Davidge were making progress. (Tr. at 850).
Davidge and Brooks met at either her New York or London apartment sometime in the middle of 1994. (Tr. at 856). They again discussed increasing prices by instituting a non-negotiable seller's commission. (Tr. at 856-57). The meeting after that took place in the fall of 1994, at Brooks' London apartment. (Tr. at 858). Davidge showed her a non-negotiable seller's commission schedule that he and his colleagues had formulated, and they discussed it in some detail. (Tr. at 858). Davidge told Brooks that Christie's Financial Department had calculated that the new schedule would add approximately fifteen to twenty million dollars in annual revenues. (Tr. at 858-59, 901). Brooks told Davidge that the schedule "looked good," but that more work was required to be done by him. (Tr. at 859). Shortly thereafter, Brooks contacted Taubman to advise him that she "had met with Mr. Davidge, and that it looked like they were moving in the direction of changing the vendor's commission to a non-negotiable vendor's commission . . ." (Tr. at 886-87). She also told Taubman that, according to Davidge, this change would add ten to fifteen million dollars in annual revenues. (Tr. at 887, 1000-1001). This was a more conservative estimate than Davidge had actually proffered. (Tr. at 887). Taubman said something to the effect of "that sounds good." (Tr. at 888).
In early 1995, Brooks and Davidge had a short meeting at her New York apartment, but they did not discuss pricing. (Tr. at 859). At one of their meetings at Brooks' New York apartment, Davidge told her that Tennant and Taubman wanted to meet with Davidge and Brooks. (Tr. at 1075). Brooks told Davidge that it was a terrible idea for the four of them to meet together. (Tr. at 1075). Brooks was aware that Taubman was meeting with Tennant during the period of 1993 through 1996, while she had been meeting with Davidge. (Tr. at 895). Taubman would often call her and ask how things were going between her and Davidge, and whether there was anything that she wanted Taubman to talk to Tennant about. (Tr. at 895).
On the evening of February 7, 1995, Davidge telephoned Brooks and told her he needed to see her right away. (Tr. at 859, 862). After arriving in New York the next morning, Davidge was picked up by Brooks at the British Airlines terminal at Kennedy Airport. (Tr. at 859-60, 862). Brooks drove to the nearest parking lot and parked her automobile. (Tr. at 860). They got into the back seat of the vehicle where they had a meeting which lasted forty-five minutes to an hour. (Tr. at 860, 861). Davidge showed Brooks a new non-negotiable seller's commission schedule that Christie's management had decided to recommend to its Board of Directors. (Tr. at 860). Brooks advised him that the anticipated schedule looked fine, but that it would have to go through the Sotheby's corporate process before Sotheby's could follow suit. (Tr. at 860).
Brooks was sure there would be some insignificant changes to the schedule prior to its adoption at Sotheby's. (Tr. at 860). Brooks had a face-to-face meeting with Taubman to tell him that she met with Davidge, and that "it look like [Christie's] was going to go ahead with the new pricing." (Tr. at 862). Taubman was pleased that it was finally happening. (Tr. at 862-63). On March 9, 1995, Brooks saw Christie's formal announcement raising the seller's commission, and called Taubman with the news. (Tr. at 864-65, 866-67). When Brooks told Taubman that "They did it, Christie's actually came out with an announcement on their price increase, . . . he said to [her], `Congratulations.'" (Tr. at 867).
On March 29, 1995, Brooks, in furtherance of the conspiracy, told the Sotheby's Board of Directors that "senior management continues to believe that the company's current vendor's commission scheme needs to be revised, and it is suggested that the company follow the scheme recently reported by Christie's, perhaps exactly. . . ." (Tr. at 867, 871, 872; Government Exhibit 106). Although the Board voiced its support for such action, it delegated the final authority for this decision to its executive committee which was comprised of Chairman Taubman, CEO Brooks, and the Vice Chairman of the Board. (Tr. at 872-73). Several weeks later, the executive committee approved the new pricing structure in line with that of Christie's. (Tr. at 873). On April 13, 1995, Sotheby's announced its new non-negotiable seller's commission rate to become effective September 5, 1995. (Tr. at 873-74). Prior to this announcement, Brooks contacted Davidge to tell him that Sotheby's would be adopting the non-negotiable seller's commission that Brooks and Davidge had discussed, but that there would be some changes. (Tr. at 874-75). On May 30, 1995, Christie's issued a press release making further changes to its seller's commission rates to become effective on September 1, 1995. (Tr. at 876). These changes by Christie's were similar to the ones made by Sotheby's. (Tr. at 876-77). The conspiratorial agreement had finally accomplished its purpose.
TAUBMAN'S DEFENSE:
It is important to note at the outset that two significant concessions were made by the defense at trial: (1) the undisputed existence of a conspiracy to fix auction commission rates charged to sellers at Sotheby's and Christies; and (2) Taubman met with Tennant on a number of occasions at his New York and London apartments at the times claimed by the prosecution. Taubman's defense was that the conspiracy was committed by Brooks and Davidge, without his knowledge or participation, even if the evidence indicated the involvement of Christie's chairman Tennant. As a result, the defendant essentially narrowed the jury's focus to the only disputed element of the crime, whether he knowingly and intentionally was a member of the charged conspiracy. In this regard, attacking the credibility of Davidge, and, more importantly, Brooks was the cornerstone of that defense. The testimony of these two admitted co-conspirators constituted the direct evidence that Taubman and Tennant met to discuss fixing prices, agreed to fix prices, and ordered their respective CEO's to carry out and execute that illegal scheme.
Defense counsel advised the jury in his opening statement that "[t]here was a crime committed here" and that "[i]t was committed by the two principal witnesses." (Tr. at 28). In discussing Brooks, defense counsel told the jury that "[t]his is basically a one-witness case." (Tr. at 29). The defense further argued that Brooks implicated the defendant, and agreed to testify against him, to avoid jail time for her own role in the conspiracy. Taubman was characterized as "Brooks' get out of jail free card," and it was repeatedly stressed that "[b]asically this case, as I said to you before, comes down to whether you believe Mrs. Brooks." (Tr. at 35, 51). Regarding the meetings during which the witnesses testified that Taubman and Tennant conspired to fix prices, defense counsel stated:
So we then go to the events shortly after that in the spring of 1993 that [the prosecutor] referred to when Mr. Taubman meets with Mr. Tennant. There's no question those meetings took place. There's no question they took place in Mr. Taubman's apartment in New York or in Mr. Taubman's apartment in London . . . That's a place where he did a lot of business. There were things that they wanted to talk about. There were issues of mutual concern to them. One of them was there had been a lot of bad-mouthing back and forth, false statements. Christie's would say bad things about Sotheby's that weren't true, and Christie's felt that Sotheby's was doing the same thing. Then there was a question of whether somebody was reaching out and trying to steal the other people's employees. So there are issues like that that were perfectly legitimate, perfectly appropriate for them to get together and talk about. And they did have the meeting that [the prosecutor] talked to you about. (Tr. at 41).
Defense counsel's closing argument basically mirrored his opening statement. He succinctly defined the issue:
We agree with . . . the prosecution on one thing: There was a crime committed here. It was committed . . . when Christopher Davidge and Mrs. Brooks sat down and agreed on a non-negotiable seller's commission. The only question before you is whether Mr. Taubman had anything to do with that agreement between Mrs. Brooks and Mr. Davidge.
(Tr. at 1990-91).
The defense again noted that this was a "one-witness case" that "comes down to whether beyond a reasonable doubt you believe the testimony of Mrs. Brooks," and repeated that "Alfred Taubman is Dede Brooks' get out of jail free card." (Tr. at 1992, 2013). He told the jurors that they "simply cannot believe Mrs. Brooks and . . . certainly cannot believe her beyond a reasonable doubt." (Tr. at 2011). He continued by noting:
This whole case turns on whether you believe Dede Brooks beyond a reasonable doubt when she tells you what happened at the meetings she said she had with Mr. Taubman. If you don't believe Dede Brooks' testimony beyond a reasonable doubt, you must acquit. Now, I tell you Dede Brooks is a walking reasonable doubt. (Tr. at 2110).
THE COURT'S JURY INSTRUCTIONS
The Court instructed the jury that the that there are three elements that the Government must prove beyond a reasonable doubt, namely: (1) that the conspiracy to fix auction commission rates charged to sellers existed at or about the time stated in the indictment; (2) that the defendant knowingly and intentionally became a member of that conspiracy; and (3) that the defendant joined that conspiracy with the intent to unreasonably restrain trade. (Tr. at 2192). With respect to the second element, which was the only element in dispute, the jury was specifically charged that the "government must prove that the defendant knowingly joined the conspiracy to fix auction commission rates charged to sellers with the intent to aid or advance the purpose of the conspiracy and not because of a mistake, accident or some other innocent reason." (Tr. at 2195). The Court's charge further instructed that ". . . a person who has no knowledge of a conspiracy but who happens to act in a way which furthers some purpose of the conspiracy does not thereby become a member of the conspiracy." (Tr. at 2195).
The defense conceded the existence of a price fixing conspiracy to the jury. The jury did not require an instruction that one cannot infer the existence of a conspiracy solely because of meetings or contacts between competitors. The Government did not use the mere existence of meetings between Taubman and Tennant to imply the existence of the conspiracy. Therefore, there was no risk that the jury would improperly infer, simply from the mere fact that Taubman and Tennant met, the existence of a price fixing conspiracy.
The proposed charge did not concern the first element of the offense. Rather the charge had been modified and adapted by the defense to apply to the second element of the crime, whether the defendant knowingly and intentionally became a member of that conspiracy. The instruction requested by the defense was modeled after an instruction given in United States v. Andreas, No. 96 CR 762 (ND.Ill. 1998), transcript dated Sept. 8, 1998, at 5589. The Andreas charge instructed the jury that "evidence of meetings, telephone calls, or other contacts between competitors does not by itself prove that there was a conspiracy," and "you may not infer the existence of a conspiracy solely from the fact that there were contacts between competitors." Although the proposed charge was fashioned from the Andreas instruction, it was changed in one significant respect. Andreas provides that meetings and contacts between competitors could not be the sole evidence upon which to infer the existence of a conspiracy. The proposed charge at issue provides that such evidence cannot alone be used to infer defendant's knowing and intentional participation in the conspiracy. The cases relied upon by defendant also stand for the proposition that a finding of the existence of a conspiracy could not be premised solely on the mere fact that competitors met. That was not an issue in this case.
Defendant contends that absent the proposed instruction, the jury was left to speculate as to the purpose of the meetings. However, given the direct evidence of defendant's involvement in the conspiracy, the jury was never in a position to simply speculate that because Taubman and Tennant met, one could infer that they must have necessarily conspired to fix seller's commission rates. Both the Government and defense offered detailed evidence of specific topics discussed, which were both a part of and outside of the charged conspiratorial agreement. The jury was never asked to speculate regarding the criminal nature of the meetings between Taubman and Tennant. Brooks and Davidge's testimony, and notes of those meetings, were the evidence in the record directly reflecting the purpose and nature of the meetings.
Defendant's contention that the Government presented "no evidence whatsoever about the substance of the Tennant/Taubman meetings" is belied by the record. (Def.'s Reply Mem. at 2). There was substantial evidence indicating that there were continuous discussions and agreements on numerous competitive issues, including pricing. It is of no consequence that the evidence does not reflect the substance of every conversation that took place between defendant and Tennant, or for that matter, between any of the four conspirators. The jury only had to find that part of those discussions concerned fixing the seller's commission rates, and that defendant and Tennant agreed to do so. The testimony of Brooks and Davidge clearly indicated that such an illegal conversation and agreement between defendant and Tennant occurred.
Additionally, the defense was given a full opportunity at trial to explore and argue the lawful content of those conversations. They specifically urged upon the jury that "there were a number of legitimate topics that they needed to talk about." (Tr. at 2132). The defense explained that the April 30th document reflected much of the nature and content of their meetings. (Tr. at 2133). Davidge testified on cross-examination that it was not "illegal," "improper," or "wrong" that Taubman and Tennant were discussing topics concerning disparaging remarks, false market share, or tortious interference. (Tr. at 548, 550, 554, 561, 563, 597, 599). Over the Government's objection, the Court also permitted the defense to elicit from Davidge his opinion that there was nothing wrong for Taubman and Tennant to discuss a "legal issue." (Tr. at 597, 599). The defense even argued that the two "were social friends" who met "when Mr. Taubman was in London for a board meeting." (Tr. at 2132). In addition, the defense argued that since "other people from Christie's and Sotherby's were meeting and talking about issues affecting the auction industry," the jury could infer that "these same issues were raised between Mr. Tennant and Mr. Taubman." (Tr. at 2132, 2133).
It was impossible for the jury to find the defendant guilty solely because he met with Tennant to discuss only uncharged agreements reflected in the April 30th summary, or any other non-conspiratorial topic. At the request of the defense, the Court gave the following instruction to ensure that the defendant would not be convicted based upon evidence of any legal or illegal agreement other than a knowing and intentional conspiracy to fix seller's commission rates:
Both the government and defense have elicited testimony concerning other alleged agreements on such topics as interest free advances, charitable contributions, introductory commissions, guarantees, insurance charges and the buyer's premium. I want to caution you that the indictment does not charge the defendant with any crime with respect to these subjects. The sole charge in this case is that the defendant participated in a conspiracy to fix auction commission rates charged to sellers. Accordingly, you may consider evidence of other alleged agreements only to the extent you believe it bears on that charge. (Tr at 2190-91).
The jury was thereby specifically instructed that much of the discussions between Taubman and Tennant did not constitute criminal activity charged in this case. The question for the jury was not whether Taubman and Tennant had "legitimate and lawful reasons to have contact with each other" (Def.'s Req. to Charge, No. 9), but whether the witnesses were credible when they testified that those meetings included an agreement to fix prices. Had the jury found that the subject matters of the meetings only concerned topics other than fixing seller's commission rates, the Court's instructions precluded a finding that those other discussions could impose criminal liability upon the defendant. Instead, the Court focused the jury on the specific criminal conduct that formed the basis of the charged indictment.
The jury was not confronted with a series of meetings whose content was unknown. The critical question for the jury was not whether there was any circumstantial evidence from which to infer an illegal purpose for the meetings. The question was whether they credited the testimony of the two coconspirators that their principals met and agreed to fix seller's commission rates, and directed them to implement the details of such an agreement. Obviously, defense counsel recognized this, since both his opening statement and summation focused predominately on attacking the credibility of these witnesses. Having found them to be credible witnesses, the jury was free to accept the direct evidence of their representation as to the unlawful purpose and content of the meetings.
The jury charge included appropriate instructions regarding the elements of the crime, reasonable doubt, direct and circumstantial evidence, and inferences. Defense counsel did not object to any of these instructions as given. Having properly instructed the jury on these issues, and given the extent of the direct evidence of defendant's knowing and intentional participation in the conspiracy, it was not necessary to give the defense proposed charge specifically addressing what inferences may be drawn from the circumstantial evidence. United States v. Warren, 453 F.2d 738 (2d Cir. 1972); see, Holland v. United States, 348 U.S. 121, 137 (1954) ("[T]he better rule is that where the jury is properly instructed on the standards for reasonable doubt, such an additional instruction on circumstantial evidence is confusing and incorrect."); see also, Affronti v. United States, 145 F.2d 3, 9 (8th Cir. 1944) ("Since the evidence of the government was unexplained and uncontradicted, and, if believed, was inconsistent with the innocence of the defendant, we think that the failure of the court to include the circumstantial evidence rule in its instruction was not error.").
The requested defense instruction was unnecessary and inappropriate since there was direct evidence that the defendant met with Tennant to conspire to fix prices. This was not a circumstantial case of similar pricing decisions and unexplained meetings and contacts from which the jury should infer the existence of a price fixing conspiracy. The jury was not confronted with a factual scenario for which the defense's proposed instruction was useful or appropriate. The jury instructions given, as a whole, properly conveyed the applicable legal principles, and excluded any chance for the jury to merely speculate or infer that simply because they met, defendant must have conspired.
A court's refusal to give a requested charge will not be a basis to set aside a jury verdict "unless the instruction was legally correct, represents a theory of the defense with basis in the record that would lead to an acquittal, and the theory is not effectively presented elsewhere in the charge." United States v. Doyle, 130 F.3d 523, 540 (2d Cir. 1997), quoting United States v. Vasquez, 82 F.3d 574, 577 (2d Cir. 1996). The instructions given as a whole foreclosed the possibility that an innocent meeting with one's competitor could support a jury finding of knowing and intentional participation in the conspiracy. In the absence of evidence to the contrary, there is a strong presumption that the jurors followed the court's instructions. United States v. Scheffer, 523 U.S. 303, 336 (1998); United States v. Casamento, 887 F.2d 1141, 1151 (2d Cir. 1989). There has been no showing that the jurors acted contrary to the Court's clear and specific instructions.
GOVERNMENT'S SUMMATION
Similarly unavailing is defendant's claim that by quoting Adam Smith in summation, the Government increased the risk that the jury would infer Taubman's participation in the conspiracy simply because he met with Tennant. Defendant argues that "informing the jury that a world famous economist was of the view that conversations between competitors always `end in a conspiracy' encouraged the jury to assume the existence of the conspiracy based on the mere fact of the meetings." (Def.'s Mem. Supp. Mot. at 6).
A jury verdict will not be lightly set aside due solely to a comment made by the prosecutor in summation. see, United States v. Young, 470 U.S. 1, 11 (1985). To warrant a new trial on such a ground, the defendant bears a substantial burden of demonstrating that the prosecutor made an improper comment, and that the improper remark caused defendant to suffer substantial prejudice. United States v. Millar, 79 F.3d 338, 343 (2d Cir. 1996). "It is the rare case in which improper comments in a prosecutor's summation are so prejudicial that a new trial is required." United States v. Rodriguez, 968 F.2d 130, 142 (2d Cir. 1992). In summation, a prosecutor is "ordinarily entitled to respond to the evidence, issues, and hypotheses propounded by the defense." United States v. Russo, 111 F.3d 124, 1997 WL 168276, *1 (2d Cir. 1997), quoting United States v. Marrale, 695 F.2d 658, 667 (2d Cir. 1982). The prosecution, as well as the defense, are afforded broad latitude in the inferences that they may suggest to the jury provided there is no misstatement of the evidence. United States v. Myerson, 18 F.3d 153, 163 (2d Cir. 1994).
At trial, defense counsel objected to the Government quoting Adam Smith and displaying that quote to the jury on a large screen. Counsel argued that such a use would in essence make Adam Smith an expert witness. The defense noted that it had no objection to the substance of the quote provided it came from the prosecutor as argument without reference to Adam Smith. In this regard the defense stated:
[I] have no objection to it coming from [the prosecutor]. That's his job. But I do object to him weighing in with Adam Smith. Seriously, this has nothing to do with the case. He can make that argument all he wants and I expect him to make it and we will argue against it. (Tr. at 1933).
The Court apprised the defense that it would have to respond to the statement as argument whether the prosecutor simply said it, or whether it was attributable to Adam Smith. But defense counsel claimed that he could "deal with" the prosecutor. (Tr. at 1935). The Court granted the defense motion to the extent that it precluded the Government from displaying the quote, as though it were a demonstrative exhibit, on a ten foot screen that the parties' were utilizing to display exhibits in the courtroom. The Court ruled that such a display was unnecessary and might be given undue weight by the jury. The prosecutor was allowed to state the quotation in his closing argument. The prosecutor made a single limited reference to the Adam Smith quotation while commenting upon the evidence regarding the nature of defendant's meetings with Tennant:
Now, a long time ago, a famous economist by the name of Adam Smith wrote in an economic textbook, and that was around the time that Sotheby's and Christie's were getting into the business, he wrote: "People in the same trade seldom meet together even for merriment or diversion, but the conversation ends in a conspiracy against the public and in some contrivance to raise prices." (Tr. at 1985-86).
The Government went on to say:
Now, Mr. Smith is not a witness here obviously, but the truth of his insight is demonstrated by the actions of Taubman and Tennant in this case. Focus on the evidence we put before you. It establishes the three things that the court will instruct the government must prove: that the conspiracy existed, that Taubman knowingly and intentionally was a member of it, and that the intent was to unreasonably restrain interstate trade. (Tr. at 1986).
Just prior to summations, and again in the final charge, the jury was instructed by the Court that what the lawyers say in their summations is not evidence. (Tr. at 1940, 2167). The substance of the quotation, as defense counsel conceded, constituted a permissible argument for the prosecutor to make on summation. The objection at trial concerned, not the pronouncement of the quotation, but the attribution of the statement to the eighteenth century economist Adam Smith and its display on a large screen. The rhetorical reference to Adam Smith did not persuade the jury to abandon the evidence and improperly infer the defendant's participation in a conspiracy solely in reliance on the economist's general comment. Nor did the challenged remark exclude the possibility of innocent meetings between competitors. The defense cannot credibly argue that the jury, on the one hand, could have rejected the direct evidence of the uncontradicted testimony of the witnesses that among the discussions at those meetings was an agreement to fix prices, but instead inferred that, based on an eighteenth century economist's generalization, the defendant was guilty of conspiracy without any believable evidence to support such a conclusion.
The Government's argument was a direct appeal to the jury's logical and common sense review of the evidence. It was reasonable for the Government to point to the existence of the twelve meetings as corroborative evidence of the testimony by Davidge and Brooks that defendant knowingly and intentionally participated in the conspiracy by meeting with Tennant and agreeing to fix prices. The jury had to consider the evidence that defendant and Tennant met, agreed to fix prices, and ordered their underlings to do so as testified to by Brooks and Davidge. It is axiomatic that jurors are not expected to leave their common sense at the door as they enter the jury room to deliberate. United States v. Tobar, 443 F.2d 835, 837 (2d Cir. 1971). Rather, jurors may formulate certain common sense conclusions about human behavior. Illinois v. Gates, 462 U.S. 213, 231 (1983). The prosecutor was entitled to ask the jury to logically consider whether to accept or reject the testimony of the main witnesses regarding defendant's guilt from a review of all the evidence, including the circumstances surrounding his actions.
The defendant points to limited portions of some post-trial interviews of jurors in support of his claim that they may have impermissibly drawn the inference that defendant was guilty solely because he met with Tennant. That argument merits little discussion. It is well settled that a jury verdict, solemnly made and publically returned in open court, cannot be impeached with jurors' post-verdict statements unless it raises a question of an extraneous influence affecting the jury. Tanner v. United States, 483 U.S. 107, 117-18 (1987); McDonald v. Pless, 238 U.S. 264, 267 (1915); Fed. Rule of Evidence 606(b). No such issue exists here. The jurors were polled and each juror affirmatively acknowledged their guilty verdict.
In any event, the jurors' complete out-of-court comments in context clearly reflect their legitimate finding that, based upon all of the evidence, the defendant conspired with Tennant, Brooks and Davidge to fix prices. The jurors' post-trial comments are no indication that their verdict was based only on the fact that the two competitors had meetings. Defendant selectively refers to certain portions of three news articles and a radio program transcript in an attempt to impeach the jury's verdict. Defendant fails to note that the jurors' post-verdict comments primarily reflect that their verdict of guilty was justifiably based on the direct testimony of Davidge and Brooks, supported by Tennant's April 30, 1993 summary. There is no basis to conclude that the jury erroneously believed it could convict the defendant merely because he met with his competitor.
Ralph Blumenthal Carol Vogel, Ex-Chief of Sotheby's Is Convicted of Price Fixing, N Y Times, Dec. 6, 2001, at A1 ("Also crucial, the jurors said, was an April 30, 1993, memo handwritten by Sir Anthony that appeared to lay out areas of agreement with Mr. Taubman . . ." "One juror . . . called the document `the kingpin.' Another juror . . . called it the `clincher.'" "Another juror . . . said they still thought [Brooks] testified truthfully. Their reaction was the same to Mr. Davidge . . ."); 1010 Morning News (WINS-AM Radio broadcast, Dec. 6, 2001) ("Juror . . . said Diana Brooks convinced her that Sotheby chairman, Alfred Taubman, engineered and ordered Brooks to carry out a commission-fixing scheme with rival action house Christie's."); Colleen DeBaise, Jurors: Pile of Evidence in Taubman Price-Fixing Case, Dow Jones Newswires, Dec. 6, 2001("[The foreperson] and other jurors said they were persuaded of Taubman's guilt by the pile of evidence that included a memo appearing to detail a 1993 breakfast meeting in London between Taubman and his counterpart at Christie's, Sir Anthony Tennant. Jurors said they were swayed when Christie's former chief executive, Christopher Davidge, testified that the note was handwritten by Tennant and detailed an agreement with Taubman to fix commission rates and to stop making disparaging comments about each other's houses. `Why are they meeting together? Two competitors?' questioned [another juror]. . . . She said she was further persuaded when Davidge and Taubman's chief executive, Diane `DeDe' Brooks, both admitted on the stand — `out of their own mouths' — to carrying out their bosses' orders to fix prices.")
Defendant's arguments in support of his application for a new trial are based upon a simplistic mischaracterization of the jury's verdict. It ignores the jury's thorough analysis of the totality of the evidence during their deliberations. Once the issue of the credibility of the main witnesses was resolved against the defendant, that evidence overwhelmingly established the defendant's guilt of the crime charged beyond a reasonable doubt. In fact, the evidence revealed that defendant was not merely a member of the conspiracy, but rather, the initiating and driving force behind it. The jury's verdict was supported by competent, satisfactory and sufficient evidence, and does not constitute a miscarriage of justice. United States v. Ferguson, 246 F.3d 129, 134 (2d Cir. 2001); United States v. Landau, 155 F.3d 93, 104 (2d Cir. 1998); United States v. Sanchez, 969 F.2d 1049, 1414 (2d Cir. 1992); Fed.R.Crim.P. 33.
Accordingly, the defendant's motion for a new trial is denied.
SO ORDERED: