## Facts

- Hal Brown, Jr. was a senior vice president for public affairs within a division of Gannett Company, Inc.; the charged operating company was Gannett Outdoor Company, Inc. of Southern California (“Gannett”).
- Michael F. Tobey was a senior executive of Foster & Kleiser Corp. (“F & K”), a billboard advertising company owned by Metromedia, Inc.
- Gannett and F & K were the two largest billboard advertising companies in California and long-time dominant competitors for billboard site leases in Southern California.
- The United States alleged that the two companies, acting through Brown and Tobey, entered an agreement that restrained competition for billboard sites.
- The agreement had two main components:
  - A “one-year” or “moratorium” arrangement: when one company lost a billboard site (for example, when a lease was not renewed), the other company would refrain from bidding for that site for one year.
  - An information-sharing arrangement: the companies would notify each other when a new billboard site was leased and when a billboard was removed from a site.
- At trial, the government relied heavily on testimony from subordinates describing communications with Brown or Tobey and communications between Brown and Tobey about the agreement, including instances of compliance with and violations of the arrangement.
- Brown, Tobey, and their companies were charged with conspiracy in restraint of trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1.
- A jury convicted Brown and Tobey. On appeal, they principally challenged a jury instruction dealing with their responsibility for unlawful acts carried out through corporate subordinates.

## Issues

1. Whether the district court’s jury instruction improperly allowed the jury to convict Brown and Tobey based on mere knowledge of subordinates’ anticompetitive conduct, rather than requiring proof beyond a reasonable doubt that each executive knowingly joined and participated in the Sherman Act conspiracy.
2. Whether the evidence was sufficient to support the jury’s finding that Brown and Tobey knowingly participated in the charged agreement to suppress competition for billboard sites.

## Decision

- The Ninth Circuit affirmed the convictions.
- The court held that the challenged instruction, read with the full set of conspiracy instructions, required the jury to find that each defendant knowingly joined the conspiracy and intended to further its unlawful objective; it did not allow conviction based only on awareness of wrongdoing by others.
- The court concluded that the trial record—particularly testimony describing Brown’s and Tobey’s communications with subordinates and with each other about the agreement—supported the jury’s finding that they participated in the agreement to refrain from bidding on each other’s former sites and to exchange site-related information.

## Legal Principles

- A criminal Sherman Act § 1 conspiracy requires proof of an agreement that restrains trade and that the defendant knowingly and intentionally joined that agreement.
- Corporate officers are not criminally liable for an antitrust conspiracy solely because of their titles or because they knew subordinates were acting unlawfully; the government must prove the officer’s knowing participation in the conspiracy.
- Jury instructions are reviewed as a whole. Ambiguous language in one portion does not require reversal if the charge overall correctly states the law and requires proof beyond a reasonable doubt of knowing membership in the conspiracy.
- Once a defendant’s membership in a conspiracy is established, the jury may consider acts and statements of other members (including employees acting within the conspiracy) in evaluating the defendant’s participation, but membership itself must be proven beyond a reasonable doubt.

## Conclusion

In *United States v. Brown & Tobey*, the Ninth Circuit affirmed Sherman Act § 1 convictions arising from an agreement between the two dominant billboard companies in Southern California to refrain for one year from bidding on each other’s former sites and to share information about new leases and removals. The defendants’ main claim—that the jury was permitted to convict them based only on knowledge of subordinates’ conduct—failed because, viewed in full context, the instructions required findings that each executive knowingly joined and participated in the conspiracy, and the record contained sufficient evidence for the jury to reach that conclusion.


United States v. Brown & Tobey, 925 F.2d 1182 (1991)