Belliston v. Texaco, Inc.

521 P.2d 379, 1974 Utah LEXIS 543
CourtUtah Supreme Court
DecidedApril 9, 1974
Docket13322
StatusPublished
Cited by26 cases

This text of 521 P.2d 379 (Belliston v. Texaco, Inc.) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Belliston v. Texaco, Inc., 521 P.2d 379, 1974 Utah LEXIS 543 (Utah 1974).

Opinions

CALLISTER, Chief Justice:

Plaintiffs, a group of Texaco lessee-dealers, initiated this action against Texa[380]*380co, Inc. to recover damages for unlawful price discrimination in violation of Section 13-5-3(a), U.C.A.1953, of the Unfair Practices Act. Defendant pleaded res judicata and moved for summary judgment. The trial court ruled that the judgment in the case of Belliston v. Texaco, Inc., in the United States District Court for the District of Utah, and as modified by the United States Court of Appeals for the Tenth Circuit, was a bar to the instant complaint, and the doctrine of res judicata applied to the claim. Defendant was granted judgment, and plaintiffs appeal.

Plaintiffs filed an action in the federal district court in 1967 against Texaco, Inc., stating two counts. In the first count, plaintiffs alleged that defendant had committed three violations of the Sherman Act, 15 U.S.C., Sections 1, 2. In the second count, defendants were alleged to have engaged in price discrimination in violation of the Robinson-Patman Act, 15 U.S.C., Section 13(a). The jury awarded substantial damages to plaintiffs on each count; the judgment in favor of plaintiffs was appealed by defendant. The Court of Appeals reversed the judgment on both counts.1

Except for the jurisdictional requirements, the language of Section 3(a) of the Unfair Practices Act is substantially similar to the provisions of Section 13(a) of the Robinson-Patman Act. Plaintiffs concede that the substance of the state statute, the nature of their claim, and the type and amount of proof required thereunder are sufficiently similar to those same elements under the federal act as to raise the bar of res judicata, if the decision in the federal action had been on the merits rather than a dismissal for lack of federal jurisdiction.

In Wheadon v. Pearson2 this court stated that the doctrine of res judicata applied not only to points and issues which were actually raised and decided in a prior action but also as to those that could have been adjudicated, with the qualification that the claim, demand, or cause be the same in both cases. If the parties have had an opportunity to present their case and judgment is rendered thereon, it is binding both as to those issues that were tried and to those that were triable in that proceeding, and they are precluded from further litigating the matter.3

Plaintiffs’ appeal is predicated on the theory that since the Court of Appeals ruled that the “in commerce” requirement of the Robinson-Patman Act had not been met and consequently the trial court did not have jurisdiction, there had been no adjudication of their claim of price discrimination, and the instant action was not barred by the doctrine of res judicata. This argument does not resolve the matter, for the issue is whether the state claim should have been asserted in the federal action, so that the parties were precluded from relitigating the claim. The resolution of this issue is contingent on whether the federal court had the power to hear this state claim in the judicial proceeding before it.

Plaintiffs’ complaint in the federal action indicated that there were grounds to plead jurisdiction based on diversity, i. e., plaintiffs were residents of Utah, and each sought damages of $25,000 for price discrimination, and defendant was a Delaware corporation with its principal office in New York. Since jurisdiction must be pleaded and proved in the federal courts and there is an alternative ground for jurisdiction of the instant claim, the concept of jurisdiction based on diversity need not be pursued.4 Plaintiffs’ pleadings invoked the jurisdiction of the federal courts concerning their price discrimination claim under the Clayton Act, 15 U.S.C., Sections [381]*38115, 26. The federal court had pendent jurisdiction to hear plaintiffs’ state claim under the Unfair Practices Act.

In United Mine Workers v. Gibbs 5 the court stated that pendent jurisdiction, in the sense of judicial power, exists whenever there is a claim arising under the Constitution, the laws of the United States, or treaties, and the relationship between that claim and a state claim permits the conclusion that the entire action before the court comprises but one constitutional case. The federal claim must have substance sufficient to confer subject matter jurisdiction on the court, i. e., the federal issues must not be so remote or play so minor a role at the trial that in effect the state claim only was tried. The state and federal claims must be derived from a common nucleus of operative fact. The court explained that if, without giving consideration to the federal or state character, a plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial proceeding and assuming the substantiality of the federal issues, there is power in the federal courts to hear the whole. The justification of péndent jurisdiction is based on considerations of judicial economy, convenience, and fairness to litigants.

In the Gibbs case, the federal claim ultimately failed (the trial court granted a judgment n. o. v.), and the only recovery was on the state claim. The Supreme Court emphasized that the state and federal claims arose from the same nucleus of operative facts and reflected alternative remedies. The court upheld the power of the trial court to render judgment on the state claim, since the federal issues could not be deemed remote or to have played a minor role in the trial of the case.6

In the instant action, plaintiffs have, in effect conceded that their state and federal claims for unlawful price discrimination arose from the same nucleus of operative facts. Was the federal claim of sufficient substance to confer jurisdiction of the subject matter on the federal court ?

A federal claim is substantial if it is not so unsound as a result of previous judicial decisions as to foreclose the subject and leave no room whatsoever for the inference that the questions sought to be raised can be the subject of controversy. [Citation] Substantiality is determined by the allegations in the complaint and not upon the facts as they may appear upon trial. . . 7

Plaintiffs in their complaint alleged that the premium and regular grade gasoline sold by defendant to each of the plaintiffs’ competitors moved in the flow of interstate commerce and was directly processed from crude oil that was shipped across state lines. Defendant challenged the jurisdiction of the trial court to hear the Robinson-Patman Act claim in its answer and during the trial with a motion to dismiss. Defendant claimed that all the alleged discriminatory sales took place in Utah and, therefore, the “in commerce” provision of the act had not been satisfied. The lower court ruled that crude oil and gasoline were the same, i. e., petroleum products. This determination was a requisite for jurisdiction under the “flow of commerce theory,” since only crude oil crossed the state line into Utah. The court of appeals8 determined that the trial court erred in this conclusion, and cited technical treatises describing the refining process. The court stated:

The production of gasoline from crude oil is a highly complex process requiring expensive, precision equipment and skilled technicians.

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Belliston v. Texaco, Inc.
521 P.2d 379 (Utah Supreme Court, 1974)

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Bluebook (online)
521 P.2d 379, 1974 Utah LEXIS 543, Counsel Stack Legal Research, https://law.counselstack.com/opinion/belliston-v-texaco-inc-utah-1974.