By on May 18th, 2015. This post currently has no responses.

Thomas Farmer Acquitted Puerto Rico Shipping Price Fixing Trial

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After a three-week trial, Thomas Farmer, a former Crowley Liner Services Vice-President was acquitted of price-fixing and bid rigging charges by a jury in Puerto Rico. The trial was before Federal District Court Judge Daniel Dominguez. The jury was composed of six men and six women. They deliberated for three hours before returning their verdict. Framer had been indicted on March 21, 2013 on a charge of conspiracy to fix and rig Puerto Rico freight surcharges with counterparts from Horizon Lines and Sea Star Line in the U.S. mainland-Puerto Rico trade.

The acquittal marks the end of the Antitrust Division’s otherwise successful investigation into price-fixing on ocean shipping route between Puerto Rico and the United States. Farmer was the second executive to go to trial. Frank Peake, the former President of Sea Star, was convicted in 2013 on a similar charge (here). Peake’s case was noteworthy in that he was sentenced to five years in prison, a record sentence for a Sherman Act conviction (here). The Peake trial came after subordinates of his and co-conspirators from other companies had pled guilty and cooperated with the government. Peak’s direct subordinate at Sea Star, Peter Baci, was sentenced to 48 months in prison and fined $20,000. Peake’s counterpart at Horizon, Gabriel Serra, was sentenced to 34 months in prison. Other executives at Sea Star and Horizon had pled guilty, and received prison terms ranging from seven months to 29 months. Three companies have paid more than $46 million in fines for their involvement in a conspiracy that included setting rates, bid rigging and other practices.

Farmer faced a maximum sentence of ten years in prison. Farmer was represented by Joseph C. Laws, Melanie Matos Gilroy Cardona and Terrance Reed.  Farmer was facing a maximum of ten years in prison if convicted and his legal team deserves great credit for the best outcome Farmer could have hoped for.  But, there are great difficulties that the Antitrust Division faces in a “last man standing trial.”  I am not familiar with the specifics of the Farmer trial but some of these inherent difficulties are:

  • Staleness:  Farmer was indicted in March 2013.  The indictment charged a conspiracy: “From at least as early as mid-2005, to in or about April 2008.”  So, Farmer was indicted just before the five-year statute of limitations expired.  His trial did not begin until more than two years after indictment.  Farmer was tried in 2015 for conduct that ended in early 2008.  Antitrust violations do not “shock the conscience” the way a crime of violence might, and the long delay between conduct and trial can diminish whatever “jury appeal” a price-fixing case might have had.
  • Witness Fatigue:  When a witness signs a cooperation agreement with the Antitrust Division, he usually doesn’t realize that his cooperation may last longer than many marriages.  It can be difficult to work with a witness who has long since (hoped) he had put this chapter of his life behind him.  Witness prep so many years after the alleged conduct occured can involve an increasing frequency of “I’m not sure.  That was a really long time ago.”  And, in this case it was.
  • Prior Statements:  As I said, I have not read the record in the Farmer case so I do not know who the witnesses were.  But, there is a good chance some of the witnesses previously testified in the Peake trial.  So besides witness fatigue and faded recollections, defense attorneys have prior statements to work with on cross-examination.
  • The Weak Cases Are The Ones That Go To Trial:  It used to be fair to say that the Antitrust Division got plea agreements from those who they had the strongest cases against, but often found itself trying weaker cases, sometimes against senior managers that had insulated themselves from most of the illegal conduct.  But, my opinion is that today cases go to trial because the sentencing guidelines are so severe (based on volume of commerce) that the “last man standing,” who can’t get a 5K cooperation agreement/downward departure, has little to lose by going to trial.  Mr. Farmer went to trial because he declared he was innocent and a jury did in fact acquit him.  But, even a guilty party might go to trial because: (a) he has at least a chance at acquittal; (b) even if convicted at trial, he will likely be sentenced to less time than he could have negotiated with the Antitrust Division pursuant to a recommended guidelines plea agreement; and (c) in any event he can appeal and hope to get a conviction reversed on appeal.  In essence, the trial is an extended sentencing hearing, with a chance of acquittal, and even if convicted, a hope the conviction can be overturned.  I co-authored an article “A Peek Behind the Record Peake Sentence” (here) that explored some of these ideas.

Congratulations to Farmer’s defense team and also to the Antitrust Division for an otherwise very successful investigation.

Thanks for reading.