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UNITED STATES v. AMERICAN HONDA MOTOR COMPANY

September 18, 1967

UNITED STATES OF AMERICA, PLAINTIFF,
v.
AMERICAN HONDA MOTOR COMPANY, INC., CHICAGO AREA HONDA DEALERS' ASSOCIATION, TOM CATES, ROBERT R. SHAW, JAMES LEE, GALE T. JOHNSON, AND BASIL PROSKIN, DEFENDANTS.



The opinion of the court was delivered by: Will, District Judge.

MEMORANDUM OPINION

Defendant American Honda Motor Company, Inc.*fn1 on November 8, 1966, moved to dismiss the instant indictment, 66 CR 574, returned September 12, 1966. The motion is predicated on the defenses of former jeopardy, and denial of due process, in violation of the Fifth Amendment. These defenses are based upon its plea of nolo contendere on March 20, 1966, and payment of a fine of $10,000, imposed June 10, 1966, under an indictment, No. 35909, returned March 15, 1966, in the Southern District of California, charging a conspiracy in the Greater Los Angeles area. The remaining defendants*fn2 filed a joint motion to dismiss March 3, 1967, urging similar grounds to those of Honda.

The instant indictment charges a conspiracy to violate Section 1*fn3 of the Sherman Act in the Chicago area. There have also been indictments in the Northern District of California (returned August 3, 1966, No. 40956) charging a conspiracy in the San Francisco area, and one (No. 8890) in the Southern District of Ohio, alleging a similar conspiracy in the Ohio area. It is also intimated that 22 or more additional similar indictments could be brought*fn4 and 1,500 indictments are possible, that being the total number of Honda dealers in the United States. The Government, however, states it has advised defendants' counsel that no further indictments are contemplated.*fn5 No explanation is given by the Government why only four indictments will be sought if there were substantial additional local conspiracies as it contends.

In general, it is Honda's position that there was, if any, but a single national conspiracy, and therefore there can be but one indictable crime. Since it has already paid the maximum penalty, no further fine may be imposed and the ban against double jeopardy is here applicable. The claim of denial of due process is predicated on unreasonable discrimination, harassment, economic hardship and excessive punishment. Defendant Honda has supported its position with careful and extensive affidavits and briefs. The gist of its position is that it was merely trying to establish a national fair trade practice and that Section 1 of the Sherman Act proscribes an illegal course of conduct, not segments thereof.

It is the Government's position that double jeopardy does not obtain in this case because it is charging four separate, local conspiracies, each involving different defendants (with the exception of Honda), residing in different geographical areas, and each covering varying periods of time. Each conspiracy, the Government asserts, is provable by different evidence. The only common point is the defendant American Honda. The Government denies that Honda's action was of a fair trade nature and nationwide in scope, on the ground that there were only "suggested" retail prices with no binding agreements by dealers to adhere to a prescribed price.

Honda's motion to dismiss is predicated on its being placed in jeopardy of conviction four or more times, whereas, it urges, Section 1 permits but one sentence for a course of conduct. Further, it asserts that it has been denied due process by the Government's failure to seek an indictment in Los Angeles against it for all its activities although the Government was then in possession of all the information necessary to obtain such an indictment. It charges that the Government seeks to harass it and impose increased punishment upon it beyond the statutory sanction, and arbitrarily and unreasonably to discriminate against Honda. The similarity in subpoenas issued originally in Los Angeles and subsequently in other cities, is evidence, Honda contends, of harassment.

The joint motion of all remaining defendants to dismiss, filed March 3, 1967, asserts (1) a denial of due process under the Fifth Amendment as outlined in Honda's earlier motion to dismiss; (2) that the Government failed to seek indictments against the remaining defendants, other than Honda, in the Los Angeles case, although it could legally have done so; (3) that the indictments were prompted to harass the defendants; (4) that it is an abuse of governmental discretion to prosecute them for a conspiracy allegedly dominated by Honda, whom the Government is constitutionally precluded from prosecuting; (5) that the defendants have engaged in no conspiracy because they did only what was legally required of them by Honda under its Fair Trade program, and (6) that defendant Cates, an employee of Honda, may not be prosecuted herein because the constitutional prohibition against prosecuting Honda applies as well to him, and because his activities as a mere corporate employee may not be made the basis of an indictment under Section 1 of the Sherman Act.

They further urge that it was Honda which suggested the formation of, and helped form, dealer associations, the primary purpose of which was joint advertising, but it also used the associations to receive dealers' comments, complaints, etc. Honda ceased its Fair Trade price maintenance program before the investigation which resulted in the instant indictment. If there was any conspiracy, they assert that the dominant force was Honda, and any conspiracy has long since been disbanded and the principal conspirator punished. The remaining defendants' activities did not constitute a conspiracy but were consonant with maintenance of the fair trade policy instituted by Honda (citing United States v. Arnold, Schwinn & Co., 237 F. Supp. 323 (N.D.Ill. 1965), reversed June 12, 1967, 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249).

Honda construes Section 1 of the Sherman Act to cover a "course of conduct" and not "each sub-part which may effectuate such conduct" and there may be only one punishment for such course of conduct. Ex Parte Snow, 120 U.S. 274, 7 S.Ct. 556, 30 L.Ed. 658 (1886); Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932); Braverman v. United States, 317 U.S. 49, 63 S.Ct. 99, 87 L.Ed. 23 (1942). It insists that the evidence shows that all the alleged separate conspiracies were sub-parts of Honda's nation-wide price maintenance system and points out that the evidence sought and submitted by the Government to the Southern District of California grand jury was directed to its nation-wide activities, its dealers and dealers' associations, although the indictment was limited to that district. Honda contends that the use of multiple grand juries where all relevant evidence was available to the first grand jury is so oppressive it violates the due process guarantee. It accuses the Government of improper motives, to harass and impose economic sanctions, which arbitrarily and unreasonably discriminate against Honda and its Japanese owners. It cites the Government's first subpoenas, nationwide in scope, given on short notice, with which it complied, even furnishing documents not requested. It alleges subsequent arbitrary and burdensome demands on itself and dealers throughout the country for duplicates of documents theretofore subpoenaed. There are also charges by Honda of four months of harassment in connection with grand jury hearings throughout the country, giving witnesses short notice, then cancellation and rescheduling, and even duplicate appearances.

Honda argues that while the various indictments by "artful" wording attempt to limit the scope of the various conspiracies to specific localities, the pleadings and evidence demonstrate that the so-called local conspiracies were all sub-parts of a nation-wide system of price maintenance.

The parties disagree as to the interpretation to be given Section 1 — Honda contending that it proscribes a "course of conduct" and the Government, that it covers each conspiracy. The court believes the latter interpretation to be the correct one in that the statute itself states "Every * * * conspiracy" is declared to be illegal. It goes on to state that "[e]very person who shall * * * engage in any * * * conspiracy * * * shall be punished." So the question resolves itself down to whether Honda was a participant in more than one conspiracy. The court concludes that Honda's position as to double jeopardy must be sustained because the record discloses that there was but one conspiracy, nation-wide in scope, between Honda and all its dealers and their dealer associations.

The evidence of the nation-wide aspect of the conspiracy lies in Honda's uniform and consistent action in the conduct of its business — the sending of similar price lists, with variations for freight, similar dealer's contracts, the same promoting of associations within the respective areas of sale, and the same activities by its district managers in supervising and maintaining the retail pricing structures. The numerous affidavits and exhibits reveal that Honda and its dealers in the United States participated in a nationwide program to fix and maintain prices, regulate sales and service policies and generally to police the distribution of Honda products.

PROCEDURAL ASPECTS

Concerning procedural aspects of the pending motions, we note there is no special plea by which these defenses can be raised. The only pleas allowed under our procedure are "not guilty, guilty and nolo contendere." All other pleas, demurrers and motions to quash are abolished. Defenses and objections raised before trial, which heretofore could have been raised by any one or more of them, must be raised only by motion to dismiss or to grant appropriate relief as provided in the Federal Rules of Criminal Procedure. (See Rules 11-12.)

Rule 12(b) provides that any defense or objection which is capable of determination without the trial of the general issue may be raised before trial by motion and, further, that issues of fact on such motions shall be determined by the court with or without a jury or on affidavits or in such other manner as the court may ...


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