United States v. Foley

Majority - Phillips, Circuit Judge

Yes, a conspiracy to fix local real estate commission rates has a sufficient nexus with interstate commerce to violate Section 1 of the Sherman Act when the brokers' activities are an integral part of and substantially affect interstate commerce. The evidence presented was sufficient for a jury to find such a violation. The court's reasoning has three main parts. First, regarding interstate commerce, the court applied the test from Goldfarb v. Virginia State Bar, determining that the brokers' services were 'an integral part of an interstate transaction.' The brokers operated in a highly transient market near Washington, D.C., advertised in out-of-state media, used national relocation services, and facilitated a substantial volume of financing from out-of-state lenders and federal agencies. The price-fixing conspiracy directly and substantially affected this stream of interstate commerce by raising the cost of services for out-of-state buyers and sellers and impacting their need for interstate financing. Second, the evidence was sufficient to prove a conspiracy. The government showed an invitation to collude (the dinner), followed by parallel pricing behavior (all firms raising rates). Crucially, this was supplemented with evidence of post-agreement policing actions, such as defendants calling each other to complain about deviations from the seven percent rate, which allowed the jury to infer a conspiratorial agreement rather than mere independent business decisions. Third, the court rejected the argument that a felony conviction under the Sherman Act requires a 'specific intent' to restrain trade. It held that the standard articulated in United States v. United States Gypsum Co.—requiring proof that defendants acted with knowledge that their conduct would affect prices—is sufficient, as Congress did not intend to change the elements of the offense when it elevated the violation from a misdemeanor to a felony.