Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Convicted executive challenges Puerto Rico’s status as ‘State’ under Sherman Act, (Mar 16, 2016)

By Greg Hammond, J.D.

A former executive for Sea Star Line LLC, a Puerto Rico freight carrier, is asking the Supreme Court to review a decision entered by the U.S. Court of Appeals in Boston that affirmed a 60 month prison sentence and $25,000 criminal fine for his participation in a conspiracy to fix prices for maritime freight services between the continental United States and Puerto Rico. The appellate court found that the district court made no errors and “marshaled this trial in a commendable manner” (Peake v. U.S., Dkt. 15-1134).

A November 2011 indictment charged that the former chief operating officer and president of Sea Star Line, Frank Peake, conspired to suppress and eliminate competition by agreeing to fix rates and surcharges for Puerto Rico freight services. To execute the scheme, according to the indictment, conspirators attended meetings and engaged in conversations and communications to (1) fix, stabilize, and maintain rates and surcharges for Puerto Rico freight services; (2) allocate customers of Puerto Rico freight services among the conspirators; and (3) rig bids submitted to customers of Puerto Rico freight services.

Peake now asks the Supreme Court: (1) Whether the First Circuit erred in determining that Puerto Rico is a State for purposes of the Sherman Act; and (2) Whether the First Circuit erred in applying a “preponderates heavily against the verdict” standard rather than an “effect on the jury” standard in its harmless error analysis, thereby ignoring the prejudicial effect of the prosecution’s repeated improper argument and questioning that followed the prosecution’s assurances to the trial court that such arguments would not be made.

In particular, Peake argues that the First Circuit’s determination that Puerto Rico is a “State” for purposes of the Sherman Act “squarely conflicts” with decisions of the U.S. Supreme Court and the Supreme Court of Puerto Rico.

Peake also noted the appellate court’s finding that the prosecutors improperly appealed to the jury’s personal interests and that the appellate court was “concerned by the impropriety of the prosecutors’ remarks.” Nevertheless, the appellate court concluded that the improprieties—which constituted an “egregious constitutional error directly impinging on Peake’s Sixth Amendment right to be tried by an impartial jury”—were harmless because the district court gave curative instructions and because the evidence did not “preponderate heavily against the verdict,” the petition states. Peake argues, however, that, “This standard strays substantially from this Court’s jurisprudence on harmless error and is fundamentally inconsistent with the nature and purpose of harmless error review.”

Attorneys: David Oscar Markus (Markus/Moss PLLC) for Petitioner.

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