Law School Case Brief
United States v. Hilton Hotels Corp. - 467 F.2d 1000 (9th Cir. 1972)
Congress may constitutionally impose criminal liability upon a business entity for acts or omissions of its agents within the scope of their employment. Such liability may attach without proof that the conduct was within the agent's actual authority, and even though it may have been contrary to express instructions. The intention to impose such liability is sometimes express, but it may also be implied.
Operators of hotels, restaurants, hotel and restaurant supply companies, and other businesses in Portland, Oregon, organized an association to attract conventions to their city. To finance the association, members were asked to make contributions in predetermined amounts. Companies selling supplies to hotels were asked to contribute an amount equal to one per cent of their sales to hotel members. To aid collections, hotel members, including appellant, agreed to give preferential treatment to suppliers who paid their assessments, and to curtail purchases from those who did not.The trial court held that these were per se violations of the Sherman Act's provisions against refusals to deal as unreasonable restraints on trade. Appellant hotels sought reversal of their conviction in a United States District Court for violating the Sherman Act, 15 U.S.C.S. § 1, by agreeing with other hotels to give preferential treatment to suppliers who paid assessments while curtailing purchases from those who refused.
Did the trial court err when it instructed the jury to consider such an agreement by hotel members, if proven, would be a per se violation of the Sherman Act?
The Court of Appeals for the Ninth Circuit held that the evidence was clearly sufficient to establish that appellant hotels agreed to prefer suppliers who paid contributions over those who did not. The primary purpose and direct effect of appellants' agreement was to bring the combined economic power of the hotels to bear upon those suppliers who failed to pay. The exclusion of uncooperative suppliers from the market was the object of the agreement, not merely its incidental consequence. A corporation was liable for acts of its agents within the scope of their authority even when done against company orders. Thus, the general policy statements of appellant's president were no defense. The purchasing agent exercised complete authority. Even if denial of appellant's motion for a copy of the transcript of witness' testimony were treated as tantamount to denying appellants the benefit of the witness' trial testimony, the error, if any, would be harmless. Thus, the court affirmed the ruling.
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