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445 F.3d 105

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445 F.3d 105, Fed. Sec. L. Rep. P 93,741

(Cite as: 445 F.3d 105)

UNITED STATES of America, Plaintiff-Appellee,

Daniel T. ROSE, Defendant-Appellant.

No. 05-10447.

May 10, 2006.

, Circuit Judge:

competition by fixing the price, rigging bids, and allocating customers for choline chloride sold

asserting insufficiency of the evidence, and challenges his sentence based on the district

court’s findings regarding the volume of commerce affected by the offense and Rose’s alleged

role as a manager or supervisor. Because the evidence is sufficient to support the jury‘s

verdict, we AFFIRM Rose’s conviction. However, we VACATE Rose’s sentence and

REMAND for resentencing.

Daniel Rose became president of DuCoa, L.P. in August 1997. DuCoa manufactured choline

chloride, a B complex vitamin essential for the proper growth and development of animals. At

that time, DuCoa and two of its competitors, Bioproducts, Inc., and Chinook Group Limited,

were responsible for more than 90% of choline chloride sales in the United States. The

Department of Justice began a grand jury investigation into price-fixing of bulk vitamins, and

officers of Bioproducts eventually approached the Department of Justice and exposed a price–

fixing conspiracy involving choline chloride. Five current and former officers of DuCoa and

Chinook pleaded guilty. DuCoa itself pleaded guilty.

proceeded to trial. A mistrial was declared when the jury was unable to agree on a verdict,

but upon retrial, the jury returned a verdict adverse to Rose. The district court sentenced

Rose to 30 months imprisonment, one year of supervised release, and a $20,000 fine,

adopting the following findings and recommendations in the Presentence Report: (1) a one–

volume of commerce of over $15 million, which included the commerce affected from August

role in the offense as a manager or supervisor, pursuant to .

In this appeal, Rose contends: (1) the evidence is insufficient to support his conviction; (2) the

district court clearly erred by finding that he was a manager or supervisor; and (3) the district

court clearly erred by holding him responsible for the volume of commerce affected before

February 1998.

We begin by reviewing Rose’s conviction. When the defendant moves for judgment of

acquittal at the close of the evidence, as Rose did here, we decide whether the evidence is

necessary that the evidence exclude every rational hypothesis of innocence or be wholly

inconsistent with every conclusion except guilt, provided a reasonable trier of fact could find

445 F.3d 105

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445 F.3d 105, Fed. Sec. L. Rep. P 93,741

(Cite as: 445 F.3d 105)

other than the act of conspiring.” Moreover, conspiracies to “submit collusive, noncompetitive,

rigged bids,” allocate customers, and fix prices are per se violations of the Sherman Act. To

show that Rose actually intended to enter into the conspiracy, “the government was required to

show that [he] knowingly joined or participated in [it].”

(internal quotations and citations omitted).

chloride, which was the price announced in various trade journals and used as a reference

point in determining the price for particular customers. The companies allocated customers

by deciding which company would offer the lowest price for choline chloride to a particular

customer at the next bidding opportunity. This agreement was aimed at stabilizing the market

and keeping the price of choline chloride higher than it would otherwise be.

1987 and was actively involved in the conspiracy. He testified that, before Rose succeeded

him, he met with Rose to explain the business to him. *631 Hilling believed he was openly

discussing the conspiracy with Rose, although he did not use terms such as “conspiracy,” “bid

rigging,” or “allocating customers.” Hilling had prepared handwritten notes prior to the meeting

to guide the discussion, and they included phrases such as “Settle Market Share Issues.” He

agreement with Rose in the latter part of September 1997 when the two were on a business

trip in Europe. Fischer testified that he and Rose discussed the recent instability of the

market. Fischer felt that Rose needed to know about the agreement so that they could

develop a strategy “to manage the market going forward.” According to Fischer, once the two

returned from Europe, they developed a strategy “to draw a line in the sand” and “show that

445 F.3d 105

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445 F.3d 105, Fed. Sec. L. Rep. P 93,741

(Cite as: 445 F.3d 105)

reallocate product to [bring] the market back into equilibrium [,] so that prices could be

stabilized and margins increased.”

meeting, which was held off-site at a small café to avoid arousing suspicion, Rose was

introduced to the competitors, and Sigler demanded that DuCoa return the Tyson account.

DuCoa refused. No agreements were reached during this meeting.

Fischer arranged for another meeting to be held the following month, in February 1998. To

prepare, he and Felix, a DuCoa vice president, “put together particular accounts that [they] felt

testified that Chinook agreed to give one of its accounts, Cagle’s, to Bioproducts to make up

for the loss of Tyson and equalize shares between the competitors. DuCoa also agreed that

its customer Roche “would be moved to [Bioproducts].” The competitors further agreed to

raise prices effective April 1, 1998 and how that would be announced in a trade publication and

letters to customers. Felix, from DuCoa, had prepared a price proposal for the group to

terms of whether or not he was still going to support the price increase in April, and to try to

see if there were some potential ways [they] could work together.” Sigler confirmed that it had

put the price increase in place, and DuCoa and Bioproducts shared the prices they intended to

offer to some of their respective customers. Sigler also wanted Tyson restored as a customer,

but Rose refused and pointed out that Cagle’s was a good compromise. Sigler relented and

Department of Justice. Rose and Kennedy were unaware of this development, but were

aware that Bioproducts became more aggressive in the marketplace during and after July.

Rose and Kennedy continued to communicate and attempted, unsuccessfully, to contact

Sigler. Rose and Kennedy planned to meet at the end of September 1998, but cancelled this

plan after the FBI executed search warrants on DuCoa’s and Chinook’s offices. Felix, Fischer,

445 F.3d 105

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445 F.3d 105, Fed. Sec. L. Rep. P 93,741

(Cite as: 445 F.3d 105)

and Kennedy ultimately pled guilty to a conspiracy to violate section one of the Sherman Act,

and Sigler was not prosecuted.

Rose contends that although a conspiracy existed before he became president of DuCoa, it no

longer existed at the time he assumed that position because of the competitors’ excessive

of evidence, and there was evidence that bidding to win the Tyson account was intended to

strengthen DuCoa’s position in enforcing the conspirators’ agreement. In any event, there is

substantial evidence of a conspiracy to fix prices and allocate customers during Rose’s tenure

and of his knowledge of and participation in that conspiracy. The evidence presented at trial

was sufficient to support the jury’s verdict that Rose conspired to restrain trade in violation of

Rose next challenges the district court’s three-level enhancement to his sentence for his

alleged role as a manager or supervisor, pursuant to . At the sentencing hearing, the district

court concluded that the PSR’s findings regarding Rose’s role in the offense were “correct

under a preponderance of the evidence standard” and overruled Rose’s objection to the

enhancement. “We review the trial court’s determination that [Rose] was a manager or

evidence or otherwise demonstrate that the information in the PSR is unreliable.”

; see also (“Post-, we continue to apply the same standard of review to claims of erroneous

fact-finding ….”).

(internal citations and quotations omitted).

Having reviewed the record in its entirety, we are not “left with the definite and firm conviction

would be part of the conspiracy once he knew of the agreement to fix prices and allocate

customers. Kennedy, an officer of Chinook, testified, “If Dan [Rose] had said … he was not

going to be part of the agreement, or if he said that we can’t discuss this, it was illegal, in my

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445 F.3d 105, Fed. Sec. L. Rep. P 93,741

(Cite as: 445 F.3d 105)

reason to have any discussions.” The evidence reasonably supports the conclusion that

Rose, as president of DuCoa, had the authority to decide what bids would be submitted to

customers and in fact exercised that control in successfully competing for the Tyson account.

At a minimum, Rose “exercised management responsibility over the property, assets, or

activities of a criminal organization.”

a leadership enhancement is appropriate. Although Rose did not recruit others into the

conspiracy, the trial testimony demonstrates that he spoke for DuCoa at the meetings,

exercised supervisory control over Fischer and Felix, and made decisions for DuCoa. The

district court did not clearly err by adopting the findings and recommendation in the PSR to

apply the three-level manager enhancement.

sales of choline chloride products that were affected by the conspiracy during the defendant’s

involvement, from August 1997 through September 1998.” Rose asserts on appeal, as he did

at the sentencing hearing, that the evidence shows that his involvement, if any, in the

conspiracy began at the meeting in February 1998.

provides for a five-level enhancement for a volume of commerce over $15 million, while

conspiracy openly with Rose. However, there is no evidence that Rose knowingly joined or

participated in the conspiracy at that time. It was not until the end of September 1997 at the

earliest, when, according to Fischer’s testimony, Fischer told Rose of his involvement in the

conspiracy. Rose and Fischer thereafter developed a strategy to strengthen DuCoa’s position

with its competitors in order to enforce the agreement that had been made in restraint of trade.

conspiracy. The government relies on an Eighth Circuit decision, , in support of its position.

445 F.3d 105

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