United States v. Peake

United States Court of Appeals
For the First Circuit

No. 16-2356

UNITED STATES OF AMERICA,

Appellee,

v.

FRANK PEAKE,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Daniel R. Domínguez, U.S. District Judge]

Before

Howard, Chief Judge,
Selya and Lipez, Circuit Judges.

David Oscar Markus, with whom Mona E. Markus, A. Margot Moss,
and Markus/Moss PLLC were on brief, for appellant.
Sean Sandoloski, Attorney, Antitrust Division, United States
Department of Justice, with whom Brent Snyder, Acting Assistant
Attorney General, James J. Fredricks and Lisa M. Phelan, Attorneys,
Antitrust Division, were on brief, for appellee.

October 23, 2017
 SELYA, Circuit Judge. Defendant-appellant Frank Peake,

smarting under the double sting of his conviction for antitrust

conspiracy and this court's affirmance of that conviction, asked

the district court to wipe the slate clean and grant him a new

trial based on freshly discovered evidence. The district court

demurred. Peake appeals. After careful consideration, we affirm

the judgment below.

I. BACKGROUND

We sketch the facts, mindful that the reader who hungers

for more exegetic detail may consult our earlier opinion affirming

the underlying conviction and the district court's thoughtful

rescript denying the appellant's motion for a new trial. See

United States v. Peake (Peake I), 804 F.3d 81 (1st Cir. 2015),

cert. denied, 137 S. Ct. 36 (2016); United States v. Peake (Peake

II), No. 11-cr-512, 2016 WL 8234673 (D.P.R. Oct. 18, 2016).

The government's case against the appellant had its

roots in "one of the largest antitrust conspiracies" in United

States history. Peake I, 804 F.3d at 84. Between 2002 and 2008,

Sea Star Line (Sea Star) and Horizon Lines (Horizon), both leading

freight carriers, agreed to fix rates and surcharges for Puerto

Rico-bound cargo in a multi-pronged effort to maintain market share

and to squelch competition.1 See id. at 85. In 2003, the appellant

1Although not relevant here, a third company, Crowley Lines,
was part of the conspiracy.

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became Sea Star's chief operating officer and, later, its

president. During his tenure, Sea Star reaped over half-a-billion

dollars in total revenue. See id. at 99-100.

While the appellant joined the conspiracy in 2005, we

fast-forward to November of 2011, at which time, a federal grand

jury indicted the appellant on a charge of conspiracy to violate

section one of the Sherman Act, which proscribes "agreements in

restraint of trade or commerce 'among the several [s]tates.'" Id.

at 86 (quoting 15 U.S.C. § 1). During the appellant's nine-day

trial in 2013, the government introduced testimony from three

cooperating witnesses: Gabriel Serra (a Horizon senior vice

president), Greg Glova (a mid-level Horizon executive who reported

to Serra), and Peter Baci (a Sea Star executive who reported to

the appellant). These three witnesses consistently described the

conspiracy's modus operandi and hierarchical structure.

Pertinently, Baci and Glova would resolve day-to-day issues

relating to pricing and market-share allocation, while the

appellant and Serra would settle any lingering disputes. For

instance, Serra testified that when Walgreens, a significant

importer of consumer goods to Puerto Rico, decided to deal

exclusively with Horizon rather than splitting shipping contracts

between Horizon and Sea Star, Serra and the appellant agreed that

Horizon "would compensate" Sea Star for its lost revenue "by

shifting cargo to Sea Star vessels" and paying Sea Star to carry

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Horizon cargo. Id. at 85. This trio of witnesses also described

meetings that the appellant had with Horizon officials regarding

the conspiracy, including a 2006 summit meeting in Orlando at which

the appellant and Serra resolved price-fixing and market-

allocation issues.

The government's case included a trove of incriminating

e-mails linking the appellant to the conspiracy. Among these

e-mails was one sent by the appellant to a Horizon executive

discussing prices quoted to a customer and expressing the

appellant's desire to "avoid a price war." Id. In other e-mails,

the appellant consulted with Horizon officials before sending

proposals to potential customers so that the two companies would

maintain balanced market shares.

All in all, an "overwhelming amount" of evidence,

including travel and telephone records, corroborated the

appellant's leading role in orchestrating the conspiracy. Id. at

94. Indeed, the evidence showed that the appellant and Serra had

more than 300 conversations, using their personal telephones,

between 2003 and 2008.

In addition, Ron Reynolds, a United States Department of

Agriculture (USDA) agent, testified about the conspiracy's impact

on federal food assistance programs. Gabriel Lafitte, the

purchasing director for nearly 200 Burger King restaurants in

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Puerto Rico, testified about the conspiracy's impact on the chain's

island-wide costs and prices.

The appellant did not offer any witnesses at trial. Nor

did he spend much time attacking the existence of the charged

conspiracy. Instead, his counsel argued that the government had

failed to prove that the appellant knowingly participated in the

conspiracy. In this vein, counsel made much of the fact that

William Stallings, a former Sea Star executive cooperating with

the government, had recorded conversations with conspiracy

participants for two months, but had never recorded any statements

by the appellant.

The jury rejected the appellant's defense and found him

guilty. The district court sentenced him to sixty months'

imprisonment, and we affirmed the conviction and sentence. See

id. at 85, 100.

Long after the jury had rendered its verdict, the

appellant learned that Stallings (whom neither party had called as

a witness) had filed a qui tam action pursuant to the False Claims

Act (FCA), 31 U.S.C. §§ 3729-3733, on January 15, 2013. In his

complaint, Stallings alleged that Sea Star and Horizon had

collogued to defraud the government. Stallings's qui tam action

was unsealed and settled approximately thirteen months later.2 Sea

2The FCA authorizes private plaintiffs to initiate, on the
government's behalf, suits that allege fraud in government

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Star agreed to pay the government $1,900,000 and Horizon agreed to

pay the government $1,500,000. For his part, Stallings received

over half-a-million dollars as a whistleblower. See id. § 3730(d).

On April 18, 2014, the appellant moved for a new trial

in his criminal case pursuant to Federal Rule of Criminal Procedure

33. He argued that the government's failure to inform him of

Stallings's qui tam action offended the due process guarantees

memorialized in Brady v. Maryland, 373 U.S. 83 (1963). The

district court denied the motion without an evidentiary hearing.

See Peake II, 2016 WL 8234673, at *11. The court reasoned that,

in light of the "massive amount of independently incriminating

evidence" introduced against the appellant at trial, there was no

reason to believe that earlier disclosure of the qui tam action

would have changed the outcome. Id. This timely appeal followed.

II. ANALYSIS

In this venue, the appellant advances two assignments of

error. First, he renews his contention that the government's

nondisclosure of Stallings's qui tam action demanded a new trial,

and he therefore faults the district court for denying his Rule 33

motion. Second, he contends for the first time that relief under

Rule 33 is warranted because Puerto Rico should not be treated

programs. See 31 U.S.C. § 3730(b); see also United States ex rel.
Winkelman v. CVS Caremark Corp., 827 F.3d 201, 203 (1st Cir. 2016).
The statute directs that such complaints be filed under seal. See
31 U.S.C. § 3730(b)(2).

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like a state for the purposes of the Sherman Act. We address these

contentions one by one.

A. The Nondisclosure Claim.

Rule 33 authorizes the district court, on motion of a

criminal defendant, to "grant a new trial if the interest of

justice so requires." Fed. R. Crim. P. 33(a). When, as now, a

Rule 33 motion is made more than fourteen days after the verdict,

it must be "grounded on newly discovered evidence." Fed. R. Crim.

P. 33(b). Under ordinary circumstances, a defendant seeking such

relief must satisfy four conditions: he must show that the

specified evidence "was unknown or unavailable to him at the time

of trial"; that the failure to discover such evidence was not the

result of his "lack of diligence"; that "the evidence is material"

and not "merely cumulative or impeaching"; and that "the evidence

is such that its introduction would probably result in an acquittal

upon a retrial of the case." United States v. Maldonado-Rivera,

489 F.3d 60, 66 (1st Cir. 2007) (citing United States v. Wright,

625 F.2d 1017, 1019 (1st Cir. 1980)).

This formulation is somewhat different if a movant

colorably asserts that the government violated Brady. Under Brady,

the government offends due process if it causes prejudice to the

defendant by "either willfully or inadvertently" suppressing

"exculpatory or impeaching" evidence in its custody or control

that is "favorable to the accused." United States v. Connolly,

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504 F.3d 206, 212 (1st Cir. 2007) (citing Strickler v. Greene, 527

U.S. 263, 281-82 (1999)). A defendant who seeks to premise his

motion for a new trial on a Brady violation must satisfy the first

(unavailability) and second (due diligence) elements of the

conventional test. See id. at 212-13. But the third and fourth

elements (materiality and prejudice, respectively) are merged and

"replaced with the unitary requirement" that the defendant need

demonstrate only "'a reasonable probability that, had the evidence

been disclosed to the defense'" in a timely manner, "'the result

of the proceeding would have been different.'" Id. at 213 (quoting

United States v. Bagley, 473 U.S. 667, 682 (1985) (opinion of

Blackmun, J.)); see Kyles v. Whitley, 514 U.S. 419, 434 (1995).

This alteration in the Rule 33 framework eases a

defendant's burden in two significant ways. For one thing, instead

of having to demonstrate "actual probability that the result would

have differed," the defendant need only point to "something

sufficient to 'undermine[] confidence in the outcome of the

trial.'" United States v. Mathur, 624 F.3d 498, 504 (1st Cir.

2010) (emphasis and alteration in original) (quoting Kyles, 514

U.S. at 434). For another thing, while impeachment evidence is

ordinarily insufficient to show materiality in the Rule 33 context,

see Connolly, 504 F.3d at 213, impeachment evidence that is

undisclosed in violation of Brady may "suffice[] to undermine

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confidence in the outcome of the trial" and, if so, warrant a new

trial, Mathur, 624 F.3d at 504 (internal quotation marks omitted).

In applying these principles, we do not write on a

pristine page. Rather, our review of a decision denying a Rule 33

motion must take into account that the district court "has a

special sense of the ebb and flow of the . . . trial." Id.

(internal quotation marks omitted). Consequently, we afford

substantial deference to the district court's views regarding the

likely impact of belatedly disclosed evidence and review its denial

of a Rule 33 motion solely for abuse of discretion. See id.;

Connolly, 504 F.3d at 211.

Here, the district court conducted a searching appraisal

of the record and found no hint of cognizable prejudice stemming

from the government's failure to disclose Stallings's filing of

the qui tam action. See Peake II, 2016 WL 8234673, at *11. We

explain briefly why this determination was well within the

encincture of the district court's discretion.

It is uncontroverted that, at the time of trial, the

appellant was unaware of Stallings's plan to file a qui tam action.

Nor does the government suggest that the appellant's lack of

awareness stemmed from any failure of diligence on his part. But

even assuming that the government knew about such evidence and had

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custody of it,3 the appellant's claim founders on the district

court's finding that he failed to show cognizable prejudice.

The appellant insists that, had he been aware of the qui

tam action, he would have called Stallings to testify and would

have elicited testimony regarding three data points: that a

different Sea Star executive (Leonard Shapiro) consummated Sea

Star's conspiratorial agreement with Horizon in 2002; that Baci

(the appellant's subordinate) played a central role in the

conspiracy; and that the appellant was not a participant in any

of the seventeen conversations that Stallings recorded while

acting under the government's auspices. None of these data points,

though, had anything to do with the qui tam action. Moreover,

none of them was controversial. The government never disputed

that it was Shapiro who forged the fifty-fifty arrangement with

Horizon in 2002 (indeed, the government itself introduced trial

testimony to that effect). So, too, Baci testified at the trial

3
We note that the appellant, in an apparent effort to prove
that the information about Stallings's initiation of suit was
within the government's custody and control, attached to his reply
brief a series of 2012 e-mails between Stallings and the lead
prosecutor. This proffer does not gain him any traction. After
all, "evidentiary matters not first presented to the district court
are . . . not properly before us." United States v. Kobrosky, 711
F.2d 449, 457 (1st Cir. 1983).
Relatedly, the appellant invites us to remand this matter to
the district court so that he may explore what the government knew
about Stallings's decision to file the qui tam action and when the
government knew it. Since we have assumed, arguendo, that the
government had custody and control over the information about
Stallings's decision, remand would serve no useful purpose.

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as a government witness and made clear that he managed the day-

to-day details touching upon Sea Star's anticompetitive

arrangement with Horizon. Last — but far from least — the

government produced Stallings's seventeen recordings in discovery,

and the appellant's counsel harped upon the appellant's absence

from the recordings in his opening statement.

The short of it is that the appellant — who could have

called Stallings as a trial witness but chose not to do so — fails

to offer any coherent explanation as to why the existence of the

qui tam action would have led him to reevaluate this decision.

Put another way, the appellant has not articulated "any plausible

strategic option" that the failure to reveal the existence of the

qui tam action either "hampered or foreclosed." Mathur, 624 F.3d

at 506. For aught that appears, knowledge of the qui tam action

would not have benefited the defense in any meaningful way.

The appellant resists the district court's conclusion to

this effect, mustering a litany of other possible uses that he

might have made of the qui tam action (had he known about it).

These are, however, shots in the dark — and none of them comes

close to hitting the mark.

To begin, the appellant submits that he would have

introduced the qui tam complaint into evidence. The complaint

would have been useful, he suggests in hindsight, because of what

it does not say (that is, it hardly refers to the appellant). But

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this is whistling past the graveyard: the qui tam complaint

contains two highly incriminating references to the appellant,

which would have buttressed the government's theory that he was a

moving force in the conspiracy.4 Thus, introduction of the qui

tam complaint into evidence would have tended to weaken, not

strengthen, the appellant's lack-of-knowledge defense.

Next, the appellant argues that timely disclosure of the

qui tam action would have enabled him to impeach Stallings

regarding the latter's financial incentive to cooperate with the

government. One flaw in this argument is that neither side called

Stallings as a trial witness, so any such impeachment evidence

would have been inadmissible. See United States v. Silva, 71 F.3d

667, 670-71 (7th Cir. 1995). And even assuming that Stallings had

testified, any impeachment value arising out of the filing of his

qui tam action would have been miniscule compared to the

impeachment evidence that the appellant already had available

(such as evidence of Stallings's hip-deep involvement in the

conspiracy and his avoidance of potentially significant prison

time through his cooperation with the government).

4The qui tam complaint alleges that any pricing matters that
were not resolved between Baci and Glova "would be bumped up the
chain of command to be addressed and resolved by" the appellant
and Serra. Similarly, the complaint describes the 2006 Orlando
meeting, during which Baci, Glova, Serra, and the appellant
discussed implementation of the companies' anticompetitive market-
share agreement.

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 Sounding a similar note, the appellant contends that he

could have used the qui tam action to impeach Reynolds (the USDA

agent) who testified for the government. Evidence of the qui tam

action would have been useful to prove Reynolds's bias, the

appellant insists, inasmuch as the appellant's conviction would

have tended to increase the likelihood of a substantial recovery

by the government in the qui tam action.

This contention borders on the frivolous. Reynolds's

testimony was offered solely to prove that the conspiracy affected

interstate commerce. See Peake I, 804 F.3d at 92, 96-97

(discussing Sherman Act's interstate commerce requirement).

Accordingly, Reynolds's testimony was brief and limited to a narrow

point: the impact that the conspiracy had on federal food

assistance programs. Seen in this light, the impeachment value of

the qui tam action vis-á-vis Reynolds would have been slim to none.

Grasping at straws, the appellant argues that knowing

about the qui tam action would have propped up his unsuccessful

motion to transfer the criminal case to the Middle District of

Florida. This argument is hopeless. In the first place, the

appellant never advanced this argument below and, as a general

rule, "legal theories not raised squarely in the lower court cannot

be broached for the first time on appeal." Teamsters, Chauffeurs,

Warehousemen & Helpers Union, Local No. 59 v. Superline Transp.

Co., 953 F.2d 17, 21 (1st Cir. 1992). In the second place, the

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propriety of venue is not material either to guilt or punishment.

Cf. United States v. Lanoue, 137 F.3d 656, 661 (1st Cir. 1998)

(noting that "[v]enue is not an element of the offense").

Consequently, information that is material only to a venue decision

does not implicate Brady.

To say more on the prejudice point would be

supererogatory. Common sense teaches that an undisclosed piece of

evidence often looms larger in the eyes of a hopeful defendant

than its actual dimensions warrant. In the Brady context, though,

prejudice cannot be viewed in a funhouse mirror. Instead, it is

a fact-specific phenomenon that must be gauged objectively in light

of the circumstances of a particular case. It is not enough that

a defendant thinks (or professes to think) that somehow, some way,

his theory of defense would have prevailed had he been given timely

access to the allegedly withheld information.

To sum up, we conclude that the district court's finding

that the appellant suffered no cognizable prejudice from the

delayed disclosure is fully supportable. The government's failure

to disclose the qui tam action is "manifestly insufficient to place

the trial record in 'such a different light as to undermine

confidence in the verdict.'" Mathur, 624 F.3d at 505 (quoting

Kyles, 514 U.S. at 435).

A loose end remains. The appellant argues, in the

alternative, that the district court should have convened an

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evidentiary hearing on his Rule 33 motion. This argument contains

more cry than wool.

We previously have explained that "evidentiary hearings

on new trial motions in criminal cases are the exception rather

than the rule." Connolly, 504 F.3d at 220. Where, as here, the

trial court supportably concludes that a Rule 33 motion "is

conclusively refuted . . . by the files and records of the case,"

such a hearing would be futile. Id. at 219-20 (internal quotation

marks omitted). Given its intricate web of findings, we discern

no abuse of discretion in the district court's declination to hold

an evidentiary hearing on the appellant's Rule 33 motion.

B. The Status Claim.

The appellant has one last arrow in his quiver. He

complains that his conviction is invalid due to Puerto Rico's

status. This plaint builds on the uncontroversial premise that

the statute of conviction (the Sherman Act) outlaws conspiracies

"in restraint of trade or commerce among the several [s]tates."

15 U.S.C. § 1. While acknowledging our case law holding that such

a proscription applies to commerce between Puerto Rico and one or

more states, see, e.g., Córdova & Simonpietri Ins. Agency Inc. v.

Chase Manhattan Bank N.A., 649 F.2d 36, 38 (1st Cir. 1981), he

exhorts us to reconsider this holding in light of the decision in

Puerto Rico v. Sanchez Valle, 136 S. Ct. 1863, 1868 (2016)

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(concluding that Puerto Rico is not a separate sovereign for the

purpose of the Double Jeopardy Clause).

Even without dwelling on the fact that this claim is

foreclosed because it was not raised below, see Superline Transp.,

953 F.2d at 21, it is without force. Under Rule 33, a new trial

motion filed more than fourteen days after the verdict — like this

one — must draw its essence from "newly discovered evidence." Fed.

R. Crim. P. 33(b). It is nose-on-the-face plain that a change in

the law does not amount to newly discovered evidence within the

purview of Rule 33. See United States v. King, 735 F.3d 1098,

1108-09 (9th Cir. 2013).

In all events, the appellant's claim is misdirected.

The record in this case makes pellucid that the conspiracy in which

the appellant participated involved more than commerce between a

state and Puerto Rico. As we noted in affirming the appellant's

conviction, the trial evidence showed that "the commerce affected

by the conspiracy was not only between a state and Puerto Rico,

but also among the states." Peake I, 804 F.3d at 86.

III. CONCLUSION

We need go no further. For the reasons elucidated

above, the judgment of the district court is

Affirmed.

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