Thomas E. Belliston v. Texaco, Inc.

455 F.2d 175
CourtCourt of Appeals for the Tenth Circuit
DecidedMarch 7, 1972
Docket71-1064
StatusPublished
Cited by57 cases

This text of 455 F.2d 175 (Thomas E. Belliston v. Texaco, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thomas E. Belliston v. Texaco, Inc., 455 F.2d 175 (10th Cir. 1972).

Opinion

BARRETT, Circuit Judge.

Plaintiffs-appellees are 15 Texaco Service Station dealers in and around the Salt Lake City, Utah, area. They filed suit against Texaco, Inc. alleging antitrust violations. Trial was to a jury in Salt Lake City. Plaintiffs were awarded treble damages in the amount of $2,623,-317. Plaintiffs-appellees shall be referred to as Dealers. Defendant-appellant Texaco, Inc. shall be referred to as Texaco.

The amended complaint contained two counts, alleging four violations. Count one claimed that Texaco violated the Sherman Act, 15 U.S.C. § 1 et seq. in that it: (1) fixed the retail price at

which Dealers must sell their gasoline; (2) coerced the Dealers to buy certain tires, batteries and accessories; and (3) conspired with other oil companies to fix the wholesale price of gasoline. The second count alleged that Texaco discriminated against the Dealers in the price of gasoline in violation of the Robinson-Patman Act, 15 U.S.C. § 13(a). Texaco challenged the lower court’s jurisdiction to hear the Robinson-Patman complaint in its answer and amended answer. During trial, Texaco again challenged the court’s jurisdiction by its motion to dismiss.

Texaco and six other major oil companies were doing business in the Salt Lake City area together with many other *177 independent companies during the period June 27, 1963 through June 27, 1967.

All of the Dealers operated retail service stations. They obtained their gasoline from Texaco. They were typical Texaco stations numbering about sixty in this particular area.

ROBINSON-PATMAN CLAIM

Dealers were awarded $597,011 in damages under 15 U.S.C. §§ 13(a) and 15. They claimed that Texaco sold gasoline to Flinco, a wholesaler, at a price less than that charged the Dealers. Essentially, Dealers had to buy their gasoline from Texaco at a contracted price. That price included trucking charges from American’s bulk plant in Salt Lake City to each Dealer’s station. Flinco supplied the same services for its stations. It picked up Texaco’s gasoline in tank trucks at American’s bulk plant and delivered it to various stations. Flinco received from Texaco % cent per gallon discount as payment for providing this delivery service above its approximately 4 cents per gallon bulk discount. Flinco owned a number of Texaco stations which it leased to others. At times it was necessary for Flinco to place its own salaried personnel in charge of stations to keep them open. Dealers charge that since Flinco paid less for its gasoline, it was able to sell gasoline from its own stations at a lower price, which it did, thereby injurying Dealers.

Dealers complained of being undersold by Flinco outlets. Although the pump prices for both types of stations were generally uniform, Flinco introduced a “bonus program” in which customers at its outlets were given merchandise and discounts. This program was, in effect, made possible by reason of the bulk discount granted Flinco by Texaco. Flinco sold gasoline to its dealers at 20 a gallon lower than Dealers could buy the same gasoline from Texaco. Flinco’s Texaco brand stations then gave their customers certificates which could be redeemed for gasoline or other products. They also gave away glassware and chances on a car and a camper. Flinco dealers, in turn, paid for this promotion. It cost each of them about 30 per gallon to participate, or a net cost to them of 10 per gallon. Dealers claim that this meant that Flinco’s Texaco brand stations undersold them even though the retail prices on the pumps were the same for both types of stations.

Before Flinco started the “bonus program”, it sponsored “canopy discounts” to customers at its stations. This involved a discount of several cents per gallon from the price showing on the pump. Flinco discontinued this practice when Texaco complained.

Dealers argue that against this background Flinco’s 40 per gallon wholesale discount was completely unjustified. However, Flinco was required to provide services at its own expense to its outlets which Texaco provided free to its dealers. Flinco (1) provided all of the maintenance for its stations; (2) hired salesmen to take orders from its dealers for products offered; (3) supplied technical advice whenever needed; (4) provided money to pay for needed technical improvements; and (5) provided an accounting service to its dealers. Dealers claim that the y2 cent per gallon rebate was intended to cover all of Flinco’s delivery expenses. Flinco was required to deliver gasoline all oyer the greater Salt Lake City area. This discount did not cover all of Flinco’s delivery expenses. It is clear, however, that the total bulk discount to Flinco did create the opportunity for Flinco outlets to undersell Dealers. One of Texaco’s employees testified that he was aware of the Flinco “bonus program” but that he was not aware that this meant that Flinco was underselling the Dealers. The first documented complaint received by Texaco from Dealers was a letter dated October, 1966, complaining of Flinco’s “bonus program”. Flinco’s general manager testified that Texaco some time thereafter terminated Flinco’s contract (the date is not reflected in the record) because of alleged price cutting. Flinco then instituted a suit against Texaco.

*178 Texaco claims lack of jurisdiction in that all of the alleged discriminatory-sales took place in Utah. Texaco contends, and we agree, that the “in commerce” provision of the Robinson-Pat-man Act has not been satisfied.

Texaco purchased its gasoline on a buy-sell agreement with the American Oil Company. Texaco produced crude oil in Colorado and sold it to American. American then transported this crude oil intermixed with other crude oil via its pipeline to Utah where it was then refined at American’s refinery. Texaco then purchased its gasoline, with Texaco’s special ingredients, from American. Texaco then distributed the gasoline to its Dealers.

For the “in commerce” provisions of the Robinson-Patman Act to be satisfied, the sales must be in interstate commerce. Standard Oil Co. v. Federal Trade Commission, 340 U.S. 231, 71 S.Ct. 240, 95 L.Ed. 239 (1951) ; Borden Company v. Federal Trade Commission, 339 F.2d 953 (7th Cir. 1964). Borden holds that it is not enough to show that a defendant is engaged in interstate commerce; rather, it must be established that the sale complained of was one occurring in interstate commerce. This court discussed the “in commerce” requirement of the Robinson-Patman Act in Food Basket, Inc. v. Albertson’s, Inc., 383 F.2d 785 (10th Cir. 1967). Albert-son’s purchased its goods from two wholesalers in Salt Lake City. The wholesalers brought the goods into Utah and held title to them while in storage.

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455 F.2d 175, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thomas-e-belliston-v-texaco-inc-ca10-1972.