Coastal Fuels v. Caribbean Petro

• Court: Court of Appeals for the First Circuit
• Decided: April 7, 1993
• Docket: 92-2301
• Status: Published

Opinion

USCA1 Opinion

April 6, 1993

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

No. 92-2301

                         COASTAL FUELS OF PUERTO RICO, INC.,

                                Plaintiff, Appellant,

                                          v.

                       CARIBBEAN PETROLEUM CORPORATION, ET AL.,

                                Defendants, Appellees.

____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

[Hon. Juan M. Perez-Gimenez, U.S. District Judge.]
                                               ___________________

                                 ____________________

                                        Before

                                 Breyer, Chief Judge,
                                         ___________
                            Selya and Cyr, Circuit Judges.
                                           ______________

                                 ____________________

            Michael  S.  Yauch  with whom  John  F.  Malley,  III,  McConnell,
            __________________             ______________________   __________
        Valdes, Kelly, Sifre, Griggs  & Ruiz-Suria and Neil O.  Bowman were on
        __________________________________________     _______________
        brief for Coastal Fuels of Puerto Rico, Inc.
            Ruben T. Nigaglioni with whom  Jorge A. Antongiorgi,  and Ledesma,
            ___________________            ____________________       ________
        Palou & Miranda were on brief for Caribbean Petroleum Corporation. 
        _______________
            Juan F. Doval  with whom Jorge R. Jimenez and Miguel Garcia Suarez
            _____________            ________________     ____________________
        were  on brief for  Harbor Fuel Service,  Inc. and Caribbean  Fuel Oil
        Trading, Inc.

                                 ____________________

                                    April 6, 1993
                                    April 6, 1993
                                 ____________________

1

BREYER, Chief Judge.  Coastal Fuels of Puerto Rico
                               ___________

             buys marine fuel  oil in San  Juan and resells  that oil  to

             ocean-going  liners at berth in San Juan Harbor.  It brought

             this antitrust  action against its local  fuel oil supplier,

             Caribbean Petroleum Corporation  ("CAPECO"), and two of  its

             competitors,   both  of  whom   CAPECO  supplies.    Coastal

             basically claims that ever  since October 1991, when Coastal

             entered the  San Juan  market, CAPECO has  charged Coastal's

             two competitors prices that are significantly lower than the

             prices  it   charges  Coastal.     This   unjustified  price

             difference, says Coastal, violates the  Robinson-Patman Act,

             15 U.S.C.   13, and the Sherman Act, 15 U.S.C.   1.  Coastal

             asked the  district court to enter  a preliminary injunction

             "requiring CAPECO  to provide fuel  oil to Coastal  on terms

             and conditions no less  favorable than those made available"

             to Coastal's competitors.  The district court decided not to

             enter the  injunction.   Coastal  appeals.   We  affirm  the

             decision.

                       In  deciding  whether   to  issue  a   preliminary

             injunction, a district court  must ask whether the plaintiff

             is likely  to succeed on  the merits, whether  the plaintiff

             will otherwise suffer irreparable harm, whether the benefits

             of an injunction will, on balance, outweigh the burdens, and

whether   an  injunction  is  consistent  with  the  "public

             interest."  Planned Parenthood  League v. Bellotti, 641 F.2d
                         __________________________    ________

             1006, 1009 (1st Cir. 1981);  Boston Celtics Ltd. Partnership
                                          _______________________________

             v. Shaw, 908  F.2d 1041, 1048 (1st  Cir. 1990).  This  court
                ____

             will normally give the district court considerable leeway in

             making  its decision, at least where,  as here, the decision

             rests  upon an  exercise of  judgment and  a record  that is

             incomplete.   Indeed, normally we will  reverse the district

             court's decision  on such matters  only if we  are convinced

             that it "abused its discretion" or committed a "clear error"

             of fact or related  law.  See, e.g., Massachusetts  Ass'n of
                                       ___  ____  _______________________

             Older Americans  v. Sharp,  700 F.2d  749, 751-52  (1st Cir.
             _______________     _____

             1983).  We can find no such error in the present case.

                       For one thing, Coastal's "likelihood of success on

             the  merits,"  is, at  best, uncertain.    On the  one hand,

             Coastal   presented   witnesses  who   testified   to  facts

             indicating significant price differences.  They said that:

                       (1) After Coastal entered the San Juan market, the
                       resale prices charged  by its competitors  (to the
                       ships) dropped by nearly $1 per barrel;

                       (2) Coastal's competitors' resale prices  were at,
                       or below, the prices CAPECO charged Coastal;

                       (3)  Coastal,  though  it  had  expected  to  earn
                       profits,  lost $1.3  million during its  first ten
                       months of operations;

-3-
                                          3

(4)  CAPECO (perhaps by mistake) once sent Coastal
                       an  invoice showing  a price  of $1.45  per barrel
                       less than the price CAPECO charged Coastal;
                       ____

                       (5) Two CAPECO  executives told Coastal executives
                       that  CAPECO  was  charging Coastal's  competitors
                       lower prices than CAPECO charged Coastal.

                       On  the  other hand,  the  record  is not  at  all

             specific about the prices charged.  Nowhere does  it contain

             figures,  or even  estimates,  of the  actual prices  either

             Coastal, or Coastal's competitors paid for fuel oil.  At the

             same time, it contains other evidence that militates against

             an eventual finding of unlawful behavior.  Cross-examination

             of Coastal's witnesses revealed  that, when CAPECO officials

             told  them  CAPECO charged  Coastal's competitors  less, the

             officials  immediately  added  that  the  price  differences

             reflected  "different contract"  terms.   The  evidence also
                         __________________   _____

             shows  that  CAPECO's   per  barrel  prices   diminished  as

             customers ordered in  greater volumes --  a kind of  volume-

             related pricing apparently commonplace  in the oil industry.

             Coastal apparently  paid "spot sales" prices for oil, and it

             may have bought  in somewhat lower  volumes.  The  Robinson-

             Patman   Act   does   not   prohibit   volume-related  price

             differences that  reflect genuine cost differences.   See 15
                                                                   ___

             U.S.C.    13(a); FTC  v. Morton  Salt Co., 334  U.S. 37,  48
                              ___     ________________

             (1948); Frederick  M. Rowe,  Price Discrimination Under  the
                                          _______________________________

-4-
                                          4

Robinson-Patman  Act, ch. 10 at 265-321 (1962).  Nor does it
             ____________________

             prohibit price  differences between spot sales and long-term

             contract  sales that  reflect  different market  conditions.

             See Texas Gulf  Sulphur Co. v. J.  R. Simplot Co., 418  F.2d
             ___ _______________________    __________________

             793, 806-08 (9th  Cir. 1969); Rowe, supra,    4.2 at 50, ch.
                                                 _____

             11 at 322-29.

                       It  may  well be  that,  at  trial, Coastal  would

             produce more specific  price information, CAPECO  would fail

             to  demonstrate  "cost  justification," and,  the  potential

             cost,  or market,  related  differences  between "spot"  and

             "contract" sales would evaporate. But, the opposite may also

             prove true.  At this stage, a court could reasonably want to

             see  more evidence  -- insisting that  the plaintiff  make a

             somewhat  stronger,  more  specific,  showing  of  a  likely

             violation of law, including a probability of overcoming what

             the  evidence  now shows  as  plausible  defenses --  before

             finding  a likelihood of  success on the  merits. See, e.g.,
                                                               ___  ____

             Atari  Games Corp.  v. Nintendo  of America, Inc.,  975 F.2d
             __________________     __________________________

             832, 837  (Fed. Cir. 1992) (plaintiff  must show "likelihood

             that  it will overcome . . . defense"); New England Braiding
                                                     ____________________

             Co.  v. A.W. Chesterton Co., 970 F.2d 878, 882-83 (Fed. Cir.
             ___     ___________________

             1992) (same).  But cf. Dallas Cowboys Cheerleaders, Inc.  v.
                            _______ _________________________________

-5-
                                          5

Scoreboard  Posters, Inc.,  600  F.2d 1184,  1188 (5th  Cir.
             ________________________

             1979).

                       For another thing, the  district court did not err

             in finding that Coastal  would not suffer "irreparable harm"

             that a later damage award could not avoid.  On the one hand,

             Coastal presented two witnesses  who testified to such harm.

             These Coastal executives said, for example, that:

                       (1) "[F]uel from CAPECO  is the only practical way
                       to purchase fuel in the harbor."

                       (2)  "[I]t's absolutely  imperative that  you have
                       the  supply from  CAPECO  refinery  it's the  only
                       locally produced product from San Juan harbor, and
                       without that access on  equal basis to that supply
                       you cannot compete in San Juan harbor."

                       (3) "[W]e are sustaining  losses in here, . .  . I
                       feel it's  damaging our trade mark,  and our brand
                       and  our  reputation, and  I  don't  think we  can
                       continue doing business like this." 

                       (4) Withdrawal from  San Juan Harbor  "would serve
                       irreparable damage upon Coastal's name  which goes
                       back to 1915 in the form of serving [marine] . . .
                       fuel in 20 other ports that we supply. . . ."

                       On the other hand, cross-examination revealed that

             Coastal is  a subsidiary of a large  firm (of the same name)

             that sells marine  fuel in 20 other ports; that, on at least

             three  occasions, Coastal  has imported  marine fuel  to San

             Juan  (for resale)  from  its parent  company's refinery  in

             Aruba;  that CAPECO  stored at  least some of  this imported

             fuel oil for Coastal  in CAPECO's San Juan  facilities; that

                                         -6-
                                          6

Coastal also, on at  least one occasion, purchased  fuel oil

             from  Sun Oil, apparently in Puerto Rico; and that Coastal's

             witnesses (despite their assurances that importation was not

             possible) were not familiar with the relevant prices.  

                       Given  this  record,  we  cannot  second-guess the

             district court's judgment that  Coastal had shown neither an

             inability to  survive (during the course  of the litigation)

             on imported oil, nor  a potential loss of "goodwill"  that a

             later damage award could not readily compensate.  Appellants

             presently point out  that the  courts possess  the power  to

             issue  a business-preserving  injunction, at  least where  a

             future damage  remedy may prove inadequate.   Compare, e.g.,
                                                           _______  ___

             Semmes Motors, Inc. v.  Ford Motor Co., 429 F.2d  1197, 1205
             ___________________     ______________

             (2d Cir. 1970) (injunction  proper to prevent termination of

             business) and Jacobson & Co. v. Armstrong Cork Co., 548 F.2d
                       ___ ______________    __________________

             438,  444-45 (2d  Cir. 1977)  (injunction proper  to prevent

             loss of customers) with Kenworth  of Boston, Inc. v.  Paccar
                                ____ _________________________     ______

             Financial  Corp., 735 F.2d 622, 625 (1st Cir. 1984) (no real
             ________________

             threat of business closure)  and Goldie's Bookstore, Inc. v.
                                          ___ ________________________

             Superior  Court of California,  739 F.2d 466,  472 (9th Cir.
             _____________________________

             1984) (insufficient  evidence of "goodwill" loss).   But, we

             also agree with the district court that plaintiff failed  to

-7-
                                          7

demonstrate   the  existence  of  circumstances  that  would

             require the exercise of that power in this case. 

                       The upshot is a preliminary injunction record that

             tends  to  show price  differences,  that  is unclear  about

             amounts,   that  suggests   the  existence   of  significant

             defenses, and that is not particularly convincing in respect

             to  "irreparable   harm."    Were   "price  differences"  an

             unmitigated  evil,  the case  for  a preliminary  injunction

             would be stronger.  But, as we have previously stated, those

             who wrote  the Robinson-Patman  Act had  pro-competitive (as
                                                                 ____

             well as  pro-competitor) objectives in mind.   See Monahan's
                                  __                        ___ _________

             Marine Inc. v. Boston  Whaler, Inc., 866 F.2d 525,  529 (1st
             ___________    ____________________

             Cir.  1989).    And,  price  differences,  based  upon  cost

             savings, will sometimes have  a pro-competitive impact.  Cf.
                                                                      ___

             id.  (recognizing  anti-competitive  dangers  of  forbidding
             ___

             selective,  but  non-predatory,  price cutting).    Thus, we

             understand  the  district  court's   hesitancy  to  issue  a

             preliminary injunction, not only  without a stronger showing

             of "irreparable  harm," but also without  knowing more about

             the  facts of  the  case.   Its decision,  in  our view,  is

             lawful.

                       We add  two  further  points.    First,  Coastal's

             complaint also asserts that CAPECO and Coastal's competitors

-8-
                                          8

violated  the Sherman Act, 15 U.S.C.   1.  Coastal's request

             for   a  preliminary  injunction,   however,  rested  almost

             entirely upon its Robinson-Patman  Act claim.  And, Coastal,

             on  this  appeal,  does not  contend  that  it  has made  an

             evidentiary  showing  sufficient  to  warrant  a preliminary

             injunction on the Sherman Act claim.  Cf.  Monahan's Marine,
                                                   ___  ________________

             866 F.2d at 529  ("evidence of a violation of  the Robinson-

             Patman  Act, showing  injury only  to competitors,  does not

             automatically show a violation of the Sherman Act as well").

                       Second, all three defendants (CAPECO and Coastal's

             two  competitors)  asked  the   district  court  to  dismiss

             Coastal's  Robinson-Patman  Act claims  on  the  ground that

             Coastal could  not show  that  either a  high-price sale  to

             Coastal, or a low-price sale to a competitor, took place "in

             [interstate] commerce."  15 U.S.C.   13(a); Standard Oil Co.
                                                         ________________

             v.  FTC, 340 U.S. 231, 236-37 (1951); Mayer Paving & Asphalt
                 ___                               ______________________

             Co. v. General Dynamics  Corp., 486 F.2d 763, 766  (7th Cir.
             ___    _______________________

             1973), cert.  denied, 414 U.S. 1146 (1974); I Phillip Areeda
                    _____________

             &  Donald F.  Turner, Antitrust  Law,    233 at  248 (1978);
                                   ______________

             Rowe, supra,    4.9 at  79.   The district court  denied the
                   _____

             motion.  The defendant  competitors ask us now to  say that,

             in doing so, the court was wrong.  

-9-
                                          9

We do not  reach the interstate  commerce question

             in the context  of this appeal.   The legality of  the order

             from which Coastal appeals --  the denial of the preliminary

             injunction -- does not depend upon the "in commerce"  issue.

             The parties that  wish to raise the  issue, the competitors,

             are defendants; and, they have not filed a notice of appeal.

             Fed. R. App. P. 3, 4.  And, in any event, the order of which

             they complain, the refusal to grant their motion to dismiss,

             is not an appealable order.  See Rodriguez v. Banco Central,
                                          ___ _________    _____________

             790  F.2d  172,  177  (1st  Cir.   1986)  (criteria  for  an

             appealable collateral order).

For  these reasons, the  decision of  the district

             court is

                       Affirmed.
                       ________

-10-
                                          10