United States: What Happens Now? Sentencing in Antitrust Cases After Booker

On January 12, 2005, the United States Supreme Court handed down its much-anticipated decision in United States v. Booker¹ and held that the mandatory scheme of the Federal Sentencing Guidelines (the "Sentencing Guidelines" or "Guidelines"), when coupled with its reliance upon judicial fact finding, is not compatible with the guarantees of the Sixth Amendment to the U.S. Constitution. This decision follows the ruling handed down last summer by the Supreme Court in Blakely v. Washington² in which the Court invalidated a state court sentence imposed pursuant to the Washington Sentencing Reform Act. After Blakely, many commentators predicted that the Federal Sentencing Guidelines, as written, were doomed to constitutional extinction given their similarity to the Washington statute. In large part, the Booker decision met these predictions as the Court declared that district judges would no longer be required to follow the Sentencing Guidelines and that sentences calculated thereunder would henceforth be deemed advisory.

Questions are now being asked about the practical impact of the Booker decision on the day-to-day administration of criminal justice and the meting out of sentences for federal crimes, including antitrust offenses. Although Congressional action is expected, it is not clear when that action will come and precisely what Congress will do in response to Booker. Significantly, the Booker decision in no way renders the Sentencing Guidelines irrelevant. District courts are still required to determine the range of sentences that would be suggested (no longer mandated) by the Guidelines, and federal prosecutors have been told that they "must actively seek sentences within the range established by the Sentencing Guidelines."³

What Booker does allow, on its face, is a more liberal consideration of the sentencing factors identified in the Sentencing Reform Act of 1984 (the "Sentencing Reform Act"), including, among others, the specific circumstances of the offense, the characteristics of the defendant, the need to provide "just punishment" and adequate deterrence, and the need to avoid sentencing disparities. District judges are now permitted to weigh and consider all these statutory sentencing factors and to exercise their discretion in imposing sentences both within and outside the sentencing ranges "advised" by the Guidelines, subject to appellate review for "reasonableness." As discussed below, the unique structure and approach of the Guidelines applicable to antitrust offenses may also, depending on the circumstances of a case, provide good reason for a court to impose a sentence outside the range recommended by the Sentencing Guidelines.

The Supreme Court’s decision in United States v. Booker is divided into two separate majority opinions:⁴ First, in an opinion written by Justice Stevens, the Court holds that the mandatory enhancement of a sentence under the Federal Sentencing Guidelines based on factual findings made by a judge rather than a jury violates the Sixth Amendment; and second, in an opinion written by Justice Breyer, the Court holds that the appropriate remedy is to sever and excise two provisions of the Sentencing Reform Act deemed incompatible with the Court’s Sixth Amendment ruling: (1) 18 U.S.C. §3553(b)(1), which makes the application of the Sentencing Guidelines mandatory, and (2) 18 U.S.C. §3742(e), which requires appellate courts to apply a de novo standard of review to district court departures from the Sentencing Guidelines.

In the majority opinion written by Justice Stevens, the Court held that the enhanced sentences called for in the companion cases before the Court involving the two respondents, Freddie Booker and Duncan FanFan, violated their Sixth Amendment rights because the sentences were predicated on factual findings made by the sentencing judge and the mandates of the Federal Sentencing Guidelines. Both Booker and FanFan stood to have nearly 10 years added to their sentences based on the post-verdict findings of the district court judges in their respective cases.

The majority characterized its constitutional holding as a logical extension of the Sixth Amendment guarantee giving a criminal defendant the right to demand that a jury find him guilty of all elements of a crime beyond a reasonable doubt and an affirmation of the Court’s 2000 holding in Apprendi v. New Jersey,⁵ which the Court restated as follows: "Any fact (other than a prior conviction) which is necessary to support a sentence exceeding the maximum authorized by the facts established by a plea of guilty or a jury verdict must be admitted by the defendant or proved to a jury beyond a reasonable doubt."⁶

On the question of remedy, Justice Breyer writes in the Court’s second majority opinion that 18 U.S.C. §3553(b)(1), which mandates adherence with the Sentencing Guidelines, must be severed to remedy its incompatibility with the Sixth Amendment.⁷ Justice Breyer observes that the statute can function independently without its mandatory provision and still be consistent with the Congressional goals of fairness and certainty in sentencing and the avoidance of unwarranted sentencing disparities. He emphasizes that, even without its "mandatory provisions," the Sentencing Act nonetheless requires judges to take account of the Guidelines together with the statute’s other sentencing goals.⁸

Finally, the Court ruled that its decision to render the Guidelines advisory also meant that the de novo standard of review required by §3524(e) for appeals from sentencing decisions could no longer be "relevant" and that severance of that subsection of the statute was also required. The Court went on to infer a standard of review based on "reasonableness" that would apply to appeals from sentencing decisions.⁹

Continued Relevance of the Guidelines but with More Potential Weight to Other Sentencing Factors. One can expect the Sentencing Guidelines to continue to play a prominent role in sentencing those convicted of antitrust offenses. As pointed out above, federal prosecutors have been instructed to seek sentences in accordance with the Guidelines. Nevertheless, Booker should allow for more flexibility in the determination of sentences and should permit sentencing judges a greater opportunity to impose sentences based on the specific circumstances of the offense and the defendant.

Although a sentencing court is no longer bound by the Guidelines, it "must consult those Guidelines and take them into account when sentencing"¹⁰ along with the other sentencing goals specified in the Sentencing Reform Act at 18 U.S.C. §3553(a). Among other things, the statute requires a sentencing judge to consider the sentencing range advised by the Guidelines, sentencing commission policy statements, and the need to avoid unwarranted disparities. It also requires sentences to reflect the seriousness of the offense, promote respect for the law, provide just punishment, offer adequate deterrence, protect the public, and effectively provide the defendant with needed educational or vocational training and medical care.

The jurisprudence on the weight to be given the Guidelines, as opposed to other sentencing factors described in §3553(a), is also likely to evolve¹¹ and to result in disagreement, as already reflected in the early district court decisions following Booker. Compare, for example, United States v. Ranum¹² (holding that guidelines should be treated as "just one of a number of sentencing factors" and that "courts may no longer uncritically apply the guidelines") with United States v. Wilson¹³ (holding that the Guidelines ought to be given "great weight" in sentencing).

While defense counsel will still make many of the same arguments they made before to support a lesser sentence (e.g., the minimal role of a defendant in the criminal conduct, the defendant’s character and integrity, history of good behavior and charitable work and giving, the adverse impact on others that would result from a defendant’s incarceration), there is now a greater opportunity to have a material impact on a defendant’s sentence. Before Booker, these arguments might only result in a sentence at the lower end of the range called for by the Guidelines. Now sentencing courts are free to impose sentences outside the ranges recommended by the Guidelines.

Most importantly, defense counsel must be sure to frame their arguments on sentencing to bring into play the sentencing factors identified in §3553(a). Also, given that sentences will be reviewed on appeal for "reasonableness," counsel and sentencing courts will need to be vigilant about making sure there is a sufficient record to allow for review of the reasons for the sentence in light of the factors described in §3553(a).

Need to Address Disparity Issue. "The need to avoid unwarranted sentence disparities among defendants" is one of the specifically enumerated sentencing factors identified in Section 3553(a), and, as pointed out by Justice Breyer, one of the important goals of the Sentencing Reform Act. One can also expect the Antitrust Division to cite the need to avoid sentencing disparity when arguing for sentences within the ranges recommended by the Guidelines. (Of course, the Antitrust Division may itself choose to argue for a greater sentence in the rare, extreme case involving more aggravating conduct on the part of a defendant.)

Although the sentence recommended by the Guidelines and the goal of avoiding unwarranted sentencing disparities are important considerations, so are the other factors listed in §3553(a). One can point, in particular, to the language in §3553(a) mandating that a sentence "be no greater than necessary… to comply with the purposes of subparagraph (2) of [the] subsection,"¹⁴ i.e., the need for just punishment, respect for the law, deterrence, protection of the public from future crimes, and effective corrective treatment of the defendant.

Of course, a defendant’s best response to the disparity issue may simply be to demonstrate the uniqueness of the facts and circumstances of the case and to argue that the Guidelines do not adequately take them into account. One particularly fertile area for such an argument might focus on the assumptions made in a given case as to the volume of commerce affected by the defendant’s violation that, under the Guidelines, serves as a significant proxy in measuring the harm caused by a defendant and the overall seriousness of a defendant’s offense.

Volume of Affected Commerce/An Opportunity to Look Behind the Numbers. Without a doubt, the volume of "affected" commerce is the most important variable in calculating a Guidelines sentence in an antitrust case. For an individual defendant, the volume of commerce, i.e., "the volume of commerce done by him or his principal in goods or services that were affected by the violation,"¹⁵ can increase an individual’s offense level by anywhere from one to seven points, which could increase a prison term by up to two years. For a corporation, the Guidelines call for a base fine equal to 20 percent of the volume of affected commerce.¹⁶ According to the Guidelines’ Commentary and Application Notes, the volume of commerce proxy presumes that the "average gain from price fixing is 10 percent of the selling price,"¹⁷ a presumption some regard as dubious.

It is no surprise that the question of what sales count in arriving at the volume of "affected" commerce has been the subject of substantial disagreement and litigation. The Antitrust Division has consistently argued in favor of the more inclusive approach adopted early on by the Sixth Circuit in United States v. Hayter Oil Co., which held that "the volume of commerce attributable to a particular defendant convicted of price-fixing includes all sales of the specific types of goods or services which were made by the defendant or his principal during the period of the conspiracy, without regard to whether individual sales were made at the target price."¹⁸ Three other circuit courts have, to varying degrees, left the door open to a defense argument that all or a portion of a defendant’s sales were not "affected" by a price fixing conspiracy. See United States v. Giordano,¹⁹ (finding only a "rebuttable presumption" that all of a defendant’s sales were affected during the period of a conspiracy); United States v. Andreas,²⁰ (holding that there was a rebuttable presumption that all sales by a defendant during a conspiratorial period were affected by an antitrust conspiracy and holding that defendants bear the burden of proving the "rare circumstance" of an unaffected sale); and United States v. SKW Metals and Alloys,²¹ (holding that the government has the burden of proving that prices charged were "affected by" the conspiracy but that sales at or above target prices need not be shown).

The volume of commerce assumed in arriving at a Guidelines sentence may well be based on sales that were the subject of little or no overcharge, even though the volume of commerce proxy assumes an average overcharge of about 10 percent. Although the Guidelines Application Notes recognize that the amount of an overcharge may be substantially greater or less than the 10 percent assumed by the Guidelines, the Guidelines make no allowance for this except to suggest that it be considered in setting a sentence within the range otherwise called for by the Guidelines. One could reasonably contend under such circumstances that reliance on the Guidelines’ proxy for measuring the seriousness of the offense and the defendant’s conduct would be fundamentally flawed and result in an "unjust" sentence, warranting a closer examination of the defendant’s conduct and its affect on prices. Consider, for example, a case where the actual overcharge is approximately 2 percent or less. One can point out that the Guidelines sentencing range grossly overstates the seriousness of the defendant’s offense since it would assume an overcharge by the defendant five times as great as what occurred in reality (10 percent vs. 2 percent).

The Antitrust Division has relied on the Alternative Fines Act, and its provisions authorizing the fines up to twice the pecuniary gain or loss attributable to a violation, in obtaining fines above the amounts authorized by the Sherman Act. For corporations, the maximum fine for offenses occurring after June 22, 2004 is $100 million. For offenses prior to that date, the maximum Sherman Act fine for a corporation is $10 million. Without the Alternative Fines Act, the government would not have been successful over the past several years in obtaining the fines of tens of millions and hundreds of millions of dollars in a number of cases.

Although the Alternative Fines Act was not at issue in Booker, Booker is resounding in its affirmation of the Sixth Amendment holding in Apprendi that requires a jury finding of any fact needed to support an increase in a defendant’s sentence. Since a Sherman Act conviction alone authorizes a sentence only up to the Sherman Act maximum, a greater sentence based on the gain/loss provisions of the Alternative Fines Statute should be constitutionally authorized only if supported by a jury finding or admitted by the defendant. In light of this, it is likely that the Justice Department will be including gain and/or loss allegations in some indictments with the expectation that they will need to prove gain or loss in order to secure a fine above the levels authorized by the Sherman Act.

A jury trial to determine gain or loss in an antitrust case may, however, lead to a protracted and overly complicated sentencing hearing. Significantly, the statute’s authorization of a fine based on pecuniary gain or loss is qualified; imposition of such a fine is authorized "unless [it] would unduly complicate or prolong the sentencing process." At least in some antitrust cases, this proviso would likely raise a substantial issue as to whether a higher fine is authorized by the Alternative Fines Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.