McWhirter Distributing Co. v. Texaco Inc.

668 F.2d 511, 1981 U.S. App. LEXIS 12762
CourtTemporary Emergency Court of Appeals
DecidedJune 1, 1981
DocketNos. 9-49, 9-50
StatusPublished
Cited by34 cases

This text of 668 F.2d 511 (McWhirter Distributing Co. v. Texaco Inc.) is published on Counsel Stack Legal Research, covering Temporary Emergency Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McWhirter Distributing Co. v. Texaco Inc., 668 F.2d 511, 1981 U.S. App. LEXIS 12762 (tecoa 1981).

Opinions

CHRISTENSEN, Judge.

These two appeals involve a single civil action which originated as a private damage, suit in the United States District Court for the Northern District of California. McWhirter Distributing Company, Inc., and other independent petroleum distributors (the distributors) brought suit against Texaco Inc. (Texaco) pursuant to the Emergency Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C. §§ 751 et seq. (incorporating inter alia § 210 of the Economic Stabilization Act of 1970 (ESA), 12 U.S.C. § 1904 note), alleging that a Texaco gasoline price increase violated regulations promulgated under the EPAA and codified in 10 C.F.R. Parts 210-212. The district court granted partial summary judgment in favor of Texaco on the regulatory claim,1 and this appeal by McWhirter and the other distributors, designated as No. 9-49, followed. We reverse.

The second appeal, No. 9-50, involves a claim filed in the same action by Texaco against the Department of Energy (DOE),2 in reliance upon the Federal Tort Claims Act, ch. 646, 62 Stat. 982 (1948) (codified in scattered sections of 28 U.S.C.), for alleged tortious violation by DOE of its own regulations in instigating an investigation against Texaco. The district court dismissed Texaco’s claim. After noting sua sponte and resolving a question of jurisdiction beyond that argued by the parties, we affirm this dismissal, but for a reason differing somewhat from those assigned by the district court.

no. 9 — 49, McWhirter.3

District Court Proceedings

On January 28, 1977, Texaco increased the price of gasoline it sold to some of its independent distributors without similarly increasing the price to its retail class of trade. Texaco admittedly thereby sought to reduce independent distributor demand in PADD V,4 its western region. Several of the independent distributors brought suit against Texaco, complaining that the “unequal price increase” violated the EPAA and regulations promulgated thereunder. After almost three years, during which considerable discovery and other proceedings were conducted, Texaco moved for summary judgment, contending that its action complied with express authorization in the regulations and thus was lawful. The district court agreed and accordingly granted summary judgment in favor of Texaco.

Concluding that plaintiffs had not alleged a direct violation of either the “maximum allowable price” rule or the rule prohibiting [515]*515“termination” of supplier/purehaser relationships, the district court did not discuss those issues. It turned to the claim that “a petroleum seller cannot lawfully increase prices unequally among classes of purchasers,” noting that the preamble to the “equal application rule,” 10 C.F.R. § 212.83(h), interprets that rule as meaning that “ ‘increased costs may be unequally applied to prices charged to classes of purchaser,’ ” as long as the refiner absorbs the appropriate “penalty.” 41 Fed.Reg. 30021 (July 21, 1976). “In other words, the rule deters unequal price increases. It does not forbid them.” Applying the rule of deference outlined in Standard Oil Co. v. DOE, 596 F.2d 1029, 1055 (TECA 1978), the court concluded:

Plaintiffs have not provided a persuasive reason for departing from this agency construction. Ruling 1975-2, 40 Fed.Reg. 10655 (1975), does not compel a departure. That ruling emphasized the importance of the maintenance of price differences among classes of purchaser.... The equal application rule furthers this aim, but it does not forbid unequal price increases.

The court next addressed plaintiffs’ “alternate claims” that Texaco’s price increase violated general regulatory provisions prohibiting “retaliatory action,” “discrimination,” and the modification of “normal business practices.” Apparently assuming that a violation of these general rules can be predicated only on an indirect violation of a specific rule, the court held that Texaco’s compliance with the equal application rule of section 212.83(h) shields Texaco from liability under the general rules. “Consequently, the seller’s motive has no regulatory significance.”5

Factual Background

In addition to distributing gasoline to ultimate end-users through its own marketing system, Texaco contracts with independent distributors who in turn supply commercial users and retail sales outlets. Each of these independent distributors competes with Texaco’s own outlets, as well as with all outlets of other brands. Plaintiffs-appellants on this appeal are such independent distributors. Prior to January 27, 1977, these distributors paid Texaco a price stated in terms of a discount from Texaco’s retail tankwagon price (the price Texaco charged its own retail dealers for gasoline).

As DOE assigned new supply obligations to the distributors,6 they exercised their rights under C.F.R. § 211.13(c)(3)7 by ap[516]*516plying to DOE for an increase in their allotments of gasoline from Texaco. DOE granted these requests over objection by Texaco. From prior to 1972 through 1976, Texaco obtained part of its supply of gasoline for west coast distribution through an agreement with Exxon whereby Exxon refined gasoline for Texaco. In June of 1976 Exxon informed Texaco that it would terminate its processing agreement on December 31,1976. Texaco asserts it thus faced a potential supply shortage in PADD V.

On January 28, 1977, Texaco implemented a price increase in PADD V consisting of a $.005 per gallon increase in the retail tankwagon price of premium gasoline and a $.015 per gallon increase in its distributor price for the product. No increase was charged to Texaco’s retail and consumer classes of purchasers for regular and unleaded gasoline, while the independent distributors were charged an additional $.01 per gallon for those products. The net effect of the “unequal price increases” was to reduce the differential between Texaco’s retail and independent distributor prices by one cent per gallon.

Regulatory Background

In November, 1973, Congress passed the Emergency Petroleum Allocation Act, 15 U.S.C. §§ 751 et seq., in order inter alia to stabilize the nation’s general economy and the petroleum industry in particular. DOE and its predecessor agencies promulgated regulations mandated by the Congress and designed to implement the provisions of the EPAA.8 A basic objective of those regulations was to maintain the supplier/purchaser relationship that existed in 1972-73. The Mandatory Petroleum Allocation Regulations set out in 10 C.F.R. Part 211 delineated limitations governing the allocation of petroleum products by suppliers.

The Mandatory Petroleum Price Regulations contained in Part 212 set out the specific pricing rules.

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Bluebook (online)
668 F.2d 511, 1981 U.S. App. LEXIS 12762, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcwhirter-distributing-co-v-texaco-inc-tecoa-1981.