UNITED STATES OF AMERICA, Plaintiff - Appellant.
KEMP & ASSOCIATES, INC.; DANIEL J. MANNIX, Defendants - Appellees.
from the United States District Court for the District of
Utah (D.C. No. 2:16-CR-00403-DS-1)
C. Finch, Principal Deputy Assistant Attorney General,
Antitrust Division (Makan Delrahim, Assistant Attorney
General, Marvin N. Price Jr., Acting Deputy Assistant
Attorney General, Kalina M. Tulley, Robert M. Jacobs, Ruben
Martinez, Jr., Molly A. Kelley, Kristen C. Limarzi, James J.
Fredricks, Adam D. Chandler, Jonathan H. Lasken, Attorneys,
with him on the briefs), Department of Justice, Washington,
DC, appearing for appellant.
A. Mitchell (Mark R. Gaylord, Jason D. Boren, Ballard Spahr
LLP, Salt Lake City, Utah, and Michael J. Grudberg, Tarter
Krinsky & Drogin LLP, New York, New York, with him on the
briefs), Ballard Spahr LLP, New York, New York appearing for
appellee Kemp & Associates, Inc.
Richard F. Albert (Devin M. Cain with him on the briefs),
Morvillo Abramowitz Grand Iason & Anello, P.C., New York,
New York appearing for appellee Daniel J. Mannix.
PHILLIPS, EBEL, and MORITZ, Circuit Judges.
axiomatic that federal courts are courts of limited
jurisdiction. See, e.g., Dutcher v.
Matheson, 733 F.3d 980, 984 (10th Cir. 2013). Bounded
first by the strictures of Article III and further by the
limits of statutory jurisdiction given to us by Congress, we
are powerless to rule on even meritorious questions that lie
beyond our purview.
appeal presents a clean lesson in the import of such
jurisdictional restraint. Of the two questions presented for
our review, the first-whether the district court correctly
dismissed the criminal indictment at issue as falling outside
the applicable statute of limitations-lies cleanly within our
jurisdiction granted by 18 U.S.C. § 3731. The second,
however, is more complex. That question-whether the district
court erred in ruling that the criminal antitrust trial
contemplated by this indictment would proceed according to a
rule of reason analysis rather than under the per se
rule-does not fall within § 3731, which closely guards
the circumstances under which the government may appeal a
district court's rulings in a criminal case.
while we hold that the indictment here was timely, we also
find that we do not have jurisdiction over the district
court's rule of reason order, and that mandamus is
inappropriate in this circumstance. Therefore we REVERSE the
district court's dismissal of the indictment, DISMISS the
government's appeal from the rule of reason order for
lack of appellate jurisdiction and REMAND for further
proceedings consistent with this opinion.
reviewing the district court's decision to dismiss the
indictment on statute of limitations grounds, "[w]e test
the indictment solely on the basis of the allegations made on
its face, and such allegations are to be taken as true."
United States v. Reitmeyer, 356 F.3d 1313, 1316-17
(10th Cir. 2004) (internal quotation omitted).
August 17, 2016, a federal grand jury in Utah returned a
single count indictment against Kemp & Associates, Inc.
("Kemp") and its Vice President/COO Daniel Mannix
(collectively, "Defendants") for knowingly entering
into a combination and conspiracy in violation of the Sherman
Act. Aplt. App. 16-21 ("Indictment") ¶¶1,
2, 8-10. Kemp is an "Heir Location Service," a term
used to describe companies that "identify heirs to
estates of intestate decedents and, in exchange for a
contingency fee, develop evidence and prove heirs' claims
to an inheritance in probate court." Id. ¶
many intestate estates become the subject of only a single
Heir Location Service inquiry, sometimes more than one Heir
Location Service begins searching for the same heirs. In such
cases, it is possible that a single potential heir will be
contacted by, and receive offers from, more than one
competing Heir Location Service. When that happens, the
services may "distinguish their offers from those of
competitors by offering more attractive contingency fee
rates." Id. ¶ 7. In this way, while a
niche community, the Heir Location Services industry operates
just like any other. When a single firm is vying for a
potential client's business, the bounds of its offer are
determined only by the price the customer is willing to pay
for the service. But where more than one firm seeks a single
client's business, then supply, in addition to demand,
influences the price ultimately paid by the customer.
criminal case the Government alleges that at some point
before January 29, 2014, Defendants "knowingly entered
into and engaged in a combination and conspiracy with Richard
A. Blake, Jr., [a competitor Heir Location Service] and other
unindicted co-conspirators to suppress and eliminate
competition by agreeing to allocate customers of Heir
Location Services sold in the United States."
Id. ¶ 9. Under this agreement, when the two
companies both contacted a potential heir, "the
co-conspirator company that first contacted that heir would
be allocated certain remaining heirs to that estate who had
yet to sign a contract with an Heir Location Services
provider." Id. ¶ 12(b). In return, the
company to which heirs were allocated "would pay to the
other co-conspirator company a portion of the contingency
fees ultimately collected from those allocated heirs."
Id. ¶ 11(c). The Government alleges that, in
furtherance of this scheme, Defendants "made payments to
the co-conspirator company, and received payments from the
co-conspirator company, in order to effectuate this
agreement." Id. ¶ 11(f). Based on an email
from Mannix to other Kemp employees, Defendants claim that
any "formal" agreement between the alleged
co-conspirators ended sometime before July 30, 2008. Aplt.
App. at 219.
front of the district court, Defendants moved for an order
that the antitrust case would proceed pursuant to the rule of
reason, as opposed to the per se rule, and to dismiss the
indictment. As to the former, the Defendants acknowledged
that customer allocation agreements are generally analyzed
under the per se rule, but nonetheless they argued that
"in the atypical context of the heir location business
the [agreement] is far from an ordinary customer allocation,
and instead bears more in common with joint ventures analyzed
under the rule of reason[.]" Id. at 167.
the statute of limitations, Defendants noted that the
limitations period for criminal violations of the Sherman Act
is five years, and they argued that the indictment was thus
untimely because any agreement between the alleged
co-conspirators ended prior to Mannix's email in July of
2008, whereas the charging Indictment wasn't returned
until August 17, 2016, and served on defendants on September
1, 2016. Defendants did acknowledge, however, that "for
some of the estates subject to the [agreement], certain
administration work continued into the five-year period prior
to the Indictment, including the recovery of money for heirs,
and the payment of the firms themselves." Aplt. App. at
194. Mr. Mannix's counsel echoed this language at oral
argument, and went even further to note that the two firms
made payments to each other as contemplated by the agreement
within the statutory period.
district court held a hearing on the two motions, and at the
conclusion orally granted Defendants' motion for the case
to be subject to the rule of reason. The Government
subsequently filed a motion to reconsider, as well as a
request for a ruling on the motion to dismiss. After that
motion was fully briefed, the court issued the rulings
relevant on appeal.
the district court adopted without edit Defendants'
proposed order regarding the rule of reason. Aplt. App. at
133-36 ("the rule of reason order"). The court also
simultaneously issued a longer memorandum decision and order
that briefly referenced its rule of reason order, but
primarily granted Defendants' motion to dismiss on the
grounds that the alleged agreement ended in 2008, and so the
2016 indictment fell outside the five-year limitations
window. Aplt. App. at 137-43 ("Dist. Ct. Order") at
Government timely appealed both orders. Recognizing that our
appellate jurisdiction was questionable as to the rule of
reason order, the government asked that if we determine we do
not have appellate jurisdiction over that order that we
"treat the relevant parts of [its] brief as a petition
for a writ of mandamus." Aplt. Br. at 12.
Statute of Limitations
first to the district court's order dismissing the
indictment as barred by the statute of limitations.
single charge in this indictment, charging a violation of 15
U.S.C. § 1, is subject to a five-year statute of
limitations. See 18 U.S.C. § 3282(a);
United States v. Evans & Assocs. Const. Co., 839
F.2d 656, 661 (10th Cir. 1988). A Sherman Act conspiracy,
such as the one alleged here, remains actionable "until
its purpose has been achieved or abandoned, and the statute
of limitations does not run so long as the co-conspirators
engage in overt acts designed to accomplish its
objectives." United States v. Inryco, Inc., 642
F.2d 290, 293 (9th Cir. 1981) (citing United States v.
Kissel, 218 U.S. 601, 607 (1910)). By way of example, if
several construction companies unlawfully conspire to rig the
bidding process on a series of construction projects, the
conspiracy does not end when the last bid is submitted.
Instead the statute of limitations is tolled as long as the
firm that ultimately received the rigged bid receives
payments on the unlawfully obtained contract. Evans,
839 F.2d at 661. The "crucial question . . . is the
scope of the conspiratorial agreement, for it is that which
determines both the duration of the conspiracy, and whether
the act relied on as an overt act may properly be regarded as
in furtherance of the conspiracy." Grunewald v.
United States, 353 U.S. 391, 397 (1957).
reviewing the scope of the conspiracy at the Motion to
Dismiss stage we are bound by the language of the indictment.
United States v. Qayyum, 451 F.3d 1214, 1218 (10th
Cir. 2006). "We test the indictment solely on the basis
of the allegations made on its face, and such allegations are
to be taken as true." Id. (quoting United
States v. Reitmeyer, 356 F.3d 1313, 1316-17 (10th Cir.
2014)). We review de novo both the district court's
determination as to the scope of the alleged conspiracy, and