Kellam Energy, Inc. v. Duncan

668 F. Supp. 861, 1987 U.S. Dist. LEXIS 7625
CourtDistrict Court, D. Delaware
DecidedAugust 19, 1987
DocketCiv. A. 84-579-CMW
StatusPublished
Cited by17 cases

This text of 668 F. Supp. 861 (Kellam Energy, Inc. v. Duncan) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kellam Energy, Inc. v. Duncan, 668 F. Supp. 861, 1987 U.S. Dist. LEXIS 7625 (D. Del. 1987).

Opinion

TABLE OF CONTENTS

PAGE

FACTS.....................................................................................................866

I. THE PARTIES..................................................................................866

A. Plaintiff......................................................................................866

B. Defendants....................................... 867

II. THE ECONOMIC RELATIONSHIP....................................................867

III. THE SEVEN CONTRACTS AT ISSUE...............................................869

IV. THE LITIGATION____________________________________________ 870

DISCUSSION........................... 871

I. SUMMARY JUDGMENT IN COMPLEX LITIGATION__________________ 871

II. DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE CONTRACT CLAIM__________________________________________________________________872

A. The Regulations and Their Interpretations___________________ 872

B. Changed Business Practices_________________________________________________________874

1. The Contracts’ Length...........................................................874

2. The Requirements Provisions..................................................875

3. The Equipment Purchase Term...............................................875

III. PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON THE BREACH OF CONTRACT: THE COMMON LAW UNFAIR COMPETITION: AND THE ANTI-TRUST COUNTERCLAIMS__________________________876

A. The Contract Counterclaim.__________________________________________________________876

1. The Covenant Not to Compete_______________________________________________876

2. The Oral Contract Modification_______________________________________________877

3. The Written Contract Terms__________________________________________________878

B. The Unfair Competition Counterclaim____________________________ 879

C. The Antitrust Counterclaims________________________________________________________880

1. Tying____________________________________________________________________________________880

a. Sale of the Tied Product_________________________________________________881

b. Coercion_________________________________________________________________________881

2. Exclusive Dealing__________________________________________________________________883

a. Whether An Arrangement Existed....................................883

*866 PAGE

b. A Significant Anti-Competitive Effect.................... 884~

i. The Relevant Line of Commerce_____________________ 884

ii. Significant Impact on Competition___________________ 885

3. Resale Price Maintenance............................................ 886

4. Attempted Monopolization____________________________________________ 888

a. The Relevant Product Market............................... 888

b. Dangerous Probability of Success.......................... 890

i. Logical Problems with the Market Share Data 890

ii. The Market Share Data................................. 890

iii. Other Factors Beyond Market Share — ............ 891

IV. CONCLUSION........................................................................ 892

OPINION

CALEB M. WRIGHT, Senior District Judge.

In this breach of contract action the defendants asserted counterclaims based on the federal antitrust laws and sundry state and common law claims. The matter is before the Court on Cross Motions for Summary Judgment.

The action was brought by Plaintiff, Kellam Energy, Inc. (“Kellam”), a Virginia corporation that is a wholesale distributor of petroleum in Delaware, Maryland and Virginia. The Defendant is R.C. Nehi Bottling, Inc. (“Nehi”), a Delaware soft drink bottling corporation that operates a chain of “Super Soda” convenience stores which sell beverages, groceries and snacks, as well as gasoline. Robert M. Duncan (“Duncan”), a Delaware resident and chief executive officer of Nehi, is the other defendant.

The Court denies Nehi’s Summary Judgment Motion on Kellam’s contract claim. There remains an unresolved factual question concerning whether certain contracts between the parties violated federal petroleum regulations.

The Court also denies Kellam’s Motion for Summary Judgment on the contract counterclaim, holding that there exists a factual dispute as to whether Kellam breached the contracts by charging Nehi too high a price for petroleum. The Court, however, grants plaintiff’s Motion for Summary Judgment on the Unfair Competition counterclaim, because it does not state a viable common law cause of action in Delaware.

The Court grants in part and denies in part plaintiff’s Motion for Summary Judgment on the four antitrust counterclaims. The Court rules that defendants’ tying counterclaim merits summary judgment because there is no evidence that the tying arrangement was forced upon Nehi. The Court also finds that the requirements contracts signed between Kellam and Nehi could not have constituted exclusive dealing, in violation of Clayton Act § 3, because no exclusive dealing arrangement existed. The Court holds that Kellam’s sales methods may have constituted resale price maintenance in violation of the Sherman Act § 1, so that summary judgment is denied on this counterclaim. Finally, the Court denies summary judgment on defendants’ attempted monopolization counterclaim.

FACTS

I. THE PARTIES
A. Plaintiff

Kellam is a regional distributor of gasoline, diesel fuel, propane gas, and home heating oil. The Company, since 1938, has sold to both retail outlets and individual consumers on the Delmarva Peninsula. The Peninsula is an isolated, rural tri-state area that includes portions of Delaware, Maryland and Virginia. Kellam also operates, on the Peninsula, a chain of convenience stores through its wholly-owned subsidiary, Shore Stop Inc. (“Shore Stop”). Both Kellam and Shore Stop are headquartered in Belle Haven, Virginia.

Kellam is a wholesale gasoline jobber. That is, it purchases oil from a large refiner — Texaco—and distributes it to retailers on the Delmarva Peninsula. The Company *867 sells gasoline through an established dealer network using, primarily, requirements contracts. Under these agreements, Kellam installs, at the retailer’s facility, underground tanks, gasoline dispensing equipment, and Texaco signs — an investment of approximately $70,000 per station.

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Bluebook (online)
668 F. Supp. 861, 1987 U.S. Dist. LEXIS 7625, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kellam-energy-inc-v-duncan-ded-1987.