Gulf Oil Corporation v. Copp Paving Company, Inc 8212 1012

• Decision Date: 17 December 1974
• Docket Number: No. 73,73
• Citation: 42 L.Ed.2d 378,95 S.Ct. 392,419 U.S. 186
• Parties: GULF OIL CORPORATION et al., Petitioners, v. COPP PAVING COMPANY, INC., et al. —1012
• Court: U.S. Supreme Court

42 L.Ed.2d 378

95 S.Ct. 392

419 U.S. 186

GULF OIL CORPORATION et al., Petitioners,

v COPP PAVING COMPANY, INC., et al.

No. 73—1012.

Argued Oct. 21, 22, 1974.

Dec. 17, 1974.

syllabus

Respondent operators of a California 'hot plant,' at which asphaltic concrete for surfacing highways is manufactured and sold entirely intrastate, alleging violations of, inter alia, § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act and §§ 3 and 7 of the Clayton Act (hereafter § 2(a)), brought suit against petitioner liquid asphalt producers and two of their subsidiaries, to which such asphalt is sold and which use it to manufacture and sell asphaltic concrete in competition with respondents. Section 2(a) forbids 'any person engaged in commerce, in the course of such commerce' to discriminate in price 'where either or any of the purchases involved in such discrimination are in commerce' and the discrimination has substantial anticompetitive effects 'in any line of commerce.' Section 3 makes it unlawful 'for any person engaged in commerce, in the course of such commerce' to make tie-in sales or enter exclusive-dealing arrangements where the effect 'may be to substantially lessen competition or tend to create a monopoly in any line of commerce.' And § 7 forbids certain acquisitions by a corporation 'engaged in commerce' of the assets or stock 'of another corporation engaged also in commerce' where the effect may be substantially to lessen competition 'in any line of commerce in any section of the country.' The District Court held that it had no jurisdiction of the claims because the market for asphaltic concrete is exclusively and necessarily local, but the Court of Appeals reversed, holding that the jurisdictional requirements of §§ 2(a), 3, and 7 were satisfied by the fact that sales of asphaltic concrete are made for use in interstate highways. Held:

1. The fact that interstate highways are instrumentalities of commerce does not render petitioners' conduct with respect to a material sold for use in constructing these highways 'in commerce' as a matter of law for purposes of §§ 2(a), 3, and 7 of the Clayton Act. Overstreet v. North Shore Corp., 318 U.S. 125, 63 S.Ct. 494, 87 L.Ed. 656, and Alstate Construction Co. v. Durkin, 345 U.S. 13, 73 S.Ct. 565, 97 L.Ed. 745, distinguished. Pp. 193 199.

2. The 'in commerce' language of the Robinson-Patman and Clayton Act provisions in question does not extend on an 'effects on commerce' theory to petitioners' sales and acquisitions. Pp. 199—203.

(a) In face of the longstanding judicial interpretation of the language of § 2(a) requiring that 'either or any of the purchases involved in such discrimination (be) in commerce,' as meaning that § 2(a) applies only where "at least one of the two transactions which, when compared, generate a discrimination . . . cross(es) a state line," Hiram Walker, Inc. v. A & § Tropical, Inc., 5 Cir., 407 F.2d 4, 9; Belliston v. Texaco, Inc., 9 Cir., 455 F.2d 175, 178, and the continued congressional silence on the subject, this Court is not warranted in extending § 2(a) beyond its clear language to reach a multitude of local activities hitherto left to state and local regulation. Pp. 199—201.

(b) The 'effects on commerce' theory, whereby §§ 3 and 7 of the Clayton Act would be held to extend to acquisitions and sales having substantial effects on commerce, even if legally correct, fails here for want of proof, since respondents presented no evidence of effect on interstate commerce from the use of asphaltic concrete in interstate highways. Pp. 201—203, 487 F.2d 202, reversed.

Moses Lasky, San Francisco, Cal., for petitioners.

Martin M. Shapero, Los Angeles, Cal., for respondents.

Mr. Justice POWELL delivered the opinion of the Court.

This case concerns the jurisdictional requirements of § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 49 Stat. 1526,¹ 15 U.S.C. § 13(a), and of §§ 3 and 7 of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. §§ 14 and 18. It presents the questions whether a firm engaged in entirely intrastate sales of asphaltic concrete, a product that can be marketed only locally, is a corporation 'in commerce' within the meaning of each of these sections, and whether such sales are 'in commerce' and 'in the course of such commerce' within the meaning of §§ 2(a) and 3 respectively. The Court of Appeals for the Ninth Circuit held these jurisdictional requirements satisfied, without more, by the fact that sales of asphaltic concrete are made for use in construction of interstate highways. 487 F.2d 202 (1973). We reverse.

I

Asphaltic concrete is a product used to surface roads and highways. It is manufactured at 'hot plants' by combining, at temperatures of approximately 375 F, about 5% liquid petroleum asphalt with about 95% aggregates and fillers. The substance is delivered by truck to construction sites, where it is placed at temperatures of about 275 F. Because it must be hot when placed and because of its great weight and relatively low value, asphaltic concrete can be sold and delivered profitably only within a radius of 35 miles or so from the hot plant.

Petitioners Union Oil Co., Gulf Oil Corp., and Edgington Oil Co., defendants below, produce liquid petroleum asphalt from crude oil at their California refineries. The companies sell liquid asphalt to their subsidiaries and other firms throughout the Western States. The market in liquid asphalt is interstate, and each oil company concedes that it engages in interstate commerce.

Petitioner Union Oil sells some of its liquid asphalt to its wholly owned subsidiary, Sully-Miller Contracting Co., which uses it to manufacture asphaltic concrete at 11 hot plants in Los Angeles and Orange Counties, Cal. Gulf Oil sells all of its liquid asphalt to its wholly owned subsidiary, petitioner Industrial Asphalt, Inc. Industrial distributes the liquid asphalt to third parties and also uses it to produce asphaltic concrete at 55 hot plants in California, Arizona, and Nevada. Edgington Oil sells its liquid asphalt to, inter alia, Sully-Miller, Industrial, and respondents.

Respondents, Copp Paving Co., Inc., Copp Equipment Co., Inc., and Ernest A. Copp,^1a operate a hot plant in Artesia, Cal., where they produce asphaltic concrete both for Copp's own use as a paving contractor and for sale to other contractors. Copp's operations and asphaltic concrete sales are limited to the southern half of Los Angeles County, where it competes with Sully-Miller and Industrial in the asphaltic concrete market. All three firms sell a more than de minimis share of their asphaltic concrete for use in the construction of local segments of the interstate highway system. Neither Copp, Industrial, nor Sully-Miller makes any interstate sales of the product.² Copp filed this complaint in the District Court for the Central District of California against the oil companies, Sully-Miller, and Industrial, seeking injunctive relief and treble damages.³ The complaint, as amended, alleged that the various defendants had committed a catalog of antitrust violations with respect to both the asphalt oil and asphaltic concrete markets. Claiming harm to itself as a consumer of liquid asphalt, Copp alleged: that the defendants had fixed prices and allocated the asphalt oil market geographically, in violation of § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1; that they had sold liquid asphalt at discriminatory prices to Copp and other purchasers, in violation of § 2(a) of the Robinson-Patman Act; and that Gulf Oil had violated § 7 of the Clayton Act by acquiring Industrial. Also claiming harm to itself as a competitor in the asphaltic concrete market, Copp further alleged: that the defendants had fixed prices, divided the market geographically, and employed various methods of monopolizing and attempting to gain a monopoly in the Los Angeles area market, in violation of §§ 1 and 2 of the Sherman Act; that, in violation of § 3 of the Clayton Act, Industrial and Sully-Miller had conditioned sales of asphaltic concrete in areas where Copp did not compete on customers' agreeing to buy only from the defendants in areas where Copp did compete, and had 'tied' sales of asphaltic concrete to sales of other commodities and to favorable extensions of credit; that, in violation of § 7 of the Clayton Act, Gulf Oil had acquired Industrial and Union Oil had acquired Sully-Miller, these acquisitions apparently having the effect of lessening competition in the Los Angeles asphaltic concrete market; and, finally, that Industrial and Sully-Miller had discriminated in the prices at which they sold asphaltic concrete, charging higher prices in areas where Copp did not compete, this in violation of § 2(a).

Because of the liquid asphalt claims, the case was one of the Western Liquid Asphalt cases transferred, pursuant to 28 U.S.C. § 1407, to the District Court for the Northern District of California for coordinated pretrial proceedings. ⁴ The defendants thereafter moved for summary judgment in favor of Sully-Miller, against which Copp had alleged only violations arising from conduct in the asphaltic concrete market. The motion also sought to limit the issues as to the other defendants to those involving liquid asphalt.

The District Court ordered full discovery as to jurisdiction over Copp's asphaltic concrete claims. At the conclusion of discovery, Copp's jurisdictional showing rested solely on the fact that some of the streets and roads in the Los Angeles area are segments of the federal interstate highway system, and on a stipulation that a greater than de minimis amount of asphaltic concrete is used in their construction and repair. The District Court thereupon entered an order dismissing all claims against Sully-Miller and those claims against the other defendants involving the marketing of asphaltic concrete.

In its opinion accompanying this order the court explicitly discussed only the...