D'Ippolito v. Cities Service Company
| Decision Date | 09 March 1967 |
| Docket Number | 30953.,30798,Dockets 30797,No. 216,217,216 |
| Citation | 374 F.2d 643 |
| Parties | Solve E. D'IPPOLITO, Edward A. D'Ippolito, William C. D'Ippolito, John B. D'Ippolito, 3rd, Marie Barry, Frank D'Orio, Dewey Spadoni and Elsie Masciarella, Plaintiffs-Appellants, v. CITIES SERVICE COMPANY, Cities Service Oil Company, Burl S. Watson, E. L. Stauffacher, F. M. Simpson and Edward W. Lang, Defendants-Appellees. Solve E. D'IPPOLITO, Edward A. D'Ippolito, William C. D'Ippolito, John B. D'Ippolito, 3rd, Marie Barry, Estate of Frank D'Orio, Dewey Spadoni and Elsie Masciarella, Plaintiffs-Appellants, v. AMERICAN OIL COMPANY, Atlantic Refining Company, California Oil Company, Gulf Oil Corporation, Humble Oil and Refining Company, Sinclair Refining Company, Sun Oil Company and Texaco, Inc., Defendants-Appellees. Solve E. D'IPPOLITO, Edward A. D'Ippolito, William C. D'Ippolito, John B. D'Ippolito, III, Marie Barry, Estate of Frank D'Orio, Dewey Spadoni, Elsie Masciarella, and D'Ippolito Oil Company, a Body Corporate of the State of Delaware, Petitioners, v. Hon. Sylvester J. RYAN, United States District Judge For the Southern District of New York, Respondent. |
| Court | U.S. Court of Appeals — Second Circuit |
Robert G. Levy, Baltimore, Md. (Berryl A. Speert, George W. Liebmann, David M. Blum, Baltimore, Md., McGoldrick, Dannett, Horowitz & Golub, New York City, on the brief), for appellants.
J. B. H. Carter, Philadelphia, Pa., for appellees.
Townley, Updike, Carter & Rodgers, New York City; Sam Erwin, Chicago, Ill., for appellee American Oil Co.
Boyden & Sarnoff, New York City; Howrey, Simon, Baker & Murchison, Washington, D. C.; Roy W. Johns, E. J. Kremer, Jr., Philadelphia, Pa., for appellee Atlantic Refining Co.
Cravath, Swaine & Moore, New York City; Richard W. Martin, Perth Amboy, N. J., for appellee California Oil Co.
Frederick L. Scofield, Arthur L. Vangeli, New York City; Jessee P. Luton, Jr., Pittsburgh, Pa., for appellee Gulf Oil Corp.
Milbank, Tweed, Hadley & McCloy, New York City; Henry Hartmann, New York City, for appellee Humble Oil & Refining Co.
Davis, Polk, Wardwell, Sunderland & Kiendl, New York City; Pepper, Hamilton & Scheetz, Philadelphia, Pa., for appellee Sun Oil Co.
James O. Sullivan, Paul B. Wells, Michael W. Graney, New York City, for appellee Texaco, Inc.
Joseph P. Walsh, D. K. McIntosh, Frank R. Clampitt, David Pendleton, Wickes, Riddell, Bloomer, Jacobi & McGuire, New York City, for appellee Sinclair Refining Co.
George H. Colin, New York City, for appellees Cities Service Co., Cities Service Oil Co. and individual appellees.
Before FRIENDLY, SMITH and ANDERSON, Circuit Judges.
Seven members of the D'Ippolito family and the estate of an eighth, on certification by the District Court under Rule 54(b), appeal from a decision of the United States District Court for the Southern District of New York, Sylvester J. Ryan, Chief Judge, which dismissed appellants and seven New Jersey corporations1 as plaintiffs in a private antitrust action brought against nine major oil companies and certain corporate officials, and thereby left a Delaware corporation as sole party plaintiff. No appeal is taken from the dismissal as to the New Jersey corporations. A petition for mandamus has been filed attacking Judge Ryan's denial of permission to file a proposed second consolidated amended complaint and his refusal to certify that denial for interlocutory review under 28 U.S.C. § 1292(b). The decision of the district court is reversed and remanded for reinstatement of the appellants as plaintiffs. The petition for writ of mandamus is denied.
Appellants' claim essentially is that they were damaged by a conspiracy in violation of the antitrust laws in restraint of trade in the sale of gasoline in a four state area. They first entered the gasoline business in the 1930's and by the end of World War II had only one delivery truck. During the 'fifties, appellants' enterprise grew rapidly and by the end of the decade they owned a highly successful business in the sale of unbranded gasoline. They operated as a partnership until 1955; thereafter, appellants began to form the seven New Jersey corporations. By 1960 they had 144 service stations in New Jersey, Pennsylvania, Delaware and Maryland. However, as their success increased, they had a corresponding difficulty in obtaining gasoline supplies from the major oil companies. This difficulty is the basis of appellants' action and allegedly necessitated the formation of the Delaware corporation.
That corporation, the D'Ippolito Oil Company, was formed in December 1960 by appellants and the Hess Oil and Chemical Company. Hess paid in $250,000, provided a twenty year supply contract and received 49% of the stock in the Delaware corporation; appellants also paid in $250,000 and received 51% of the stock. On December 15, 1960 a Purchase Agreement was entered into by appellants "individually and as trustee" for the New Jersey corporations by which appellants agreed to deliver to the Delaware corporation 100% of the stock of the New Jersey corporations for $1,250,000. Of this sum, $315,000 was to be paid immediately by check and $935,000 was to be paid in ten annual installments evidenced by a promissory note of the Delaware corporation. This note was secured by a mortgage on the physical assets of the Delaware corporation and a pledge agreement covering the Hess shares. Pursuant to the purchase agreement, appellants delivered their stock to the Delaware corporation and received a check for $315,000, the promissory note and the pledge agreement; the New Jersey corporations deeded their real estate to the Delaware corporation and the latter gave appellants a mortgage on the real estate to secure the promissory note; the New Jersey corporations were merged into the Delaware corporation; the appellants delivered to the Delaware corporation twenty year employment contracts and covenants not to compete for five years after the termination of their employment, the latter and Hess executed the gasoline supply agreement.
In January 1963 the original complaint was filed in this action in the Southern District of New York, against Cities Service, one of its subsidiaries and four of its employees. Named as plaintiffs were the Delaware corporation and the individuals as "assignees of the claims for relief and causes of action * * * as the former stockholders" of the New Jersey corporations and as "assignees of said claims and causes of action and as former stockholders, directors and liquidating trustees." On March 6, 1964, the identical parties plaintiff filed a second action in the Southern District against eight other major oil companies. Later, the two actions were combined in an amended consolidated complaint. Listed as plaintiffs were the Delaware corporation, the individuals as directors, liquidating trustees and stockholders of the New Jersey corporations and the New Jersey corporations. This complaint also recited that the claims sued on "were not transferred to or merged in" the Delaware corporation "but rather were reserved in and preserved by" the New Jersey corporations "on behalf of themselves and the Stockholders thereof."
The consolidated amended complaint alleged in effect that plaintiffs' enterprise in its various forms was troublesome competition to the major oil companies' operations, particularly their sale of brand name gasoline; that defendants conspired to restrain the trade in gasoline in the four state area, discriminated against plaintiffs' business organizations, imposed limitations on them, reduced and cut off their supplies, forced them to dispose for an inadequate price of a major (49%) interest in the assets of their New Jersey corporations in order to survive at all in the form of the 51% owned Delaware corporation with a supply contract with Hess. It alleged also that the existence of the conspiracy was concealed and not learned of by plaintiffs until after March 28, 1960.
The defendants moved to dismiss or for partial summary judgment as to all plaintiffs except the Delaware corporation. After argument and before decision on the motion, plaintiffs sought leave to file a proposed second consolidated amended complaint which named as plaintiffs the Delaware corporation, Solve E., Edward A., William C. and John B. D'Ippolito, 3rd, as partners and the individuals as "assignees" of the New Jersey corporations and as parties directly injured. Although supposedly limited to clarification of the individuals' capacity to sue, the proposed amended complaint also detailed substantive claims based on a recently handed down criminal indictment covering much of the same ground as appellants' suit.2 By agreement, defendants' motions were deemed addressed to both complaints. The motion to dismiss was granted for failure to state a claim on behalf of the individual plaintiffs and the New Jersey corporations on which relief could be granted, as to which a certification was made under Rule 54(b) Fed.R.Civ.P., and the application for leave to file the second amended consolidated complaint was denied. This appeal from the dismissal as to the individual plaintiffs, and an application for writ of mandamus to require granting of leave to file the amended complaint and the issuance of a certificate under 28 U.S.C. § 1292(b) followed. No appeal was taken from the dismissal as to the New Jersey corporations.
In dismissing the complaint as to the individual plaintiffs, Judge Ryan determined that there had been no reservation or assignment to the individuals at the time of dissolution of the partnership or merger in the Delaware corporation of any right of action against defendants theretofore existing. It may be conceded that neither in the consolidated amended complaint nor in the many confusing statements of position by counsel during the proceedings to date has there been any thoroughly clear and...
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