Littlejohn v. Shell Oil Company

• Decision Date: 17 December 1973
• Docket Number: No. 71-2090.,71-2090.
• Citation: 483 F.2d 1140
• Parties: Ralph H. LITTLEJOHN, Jr., Plaintiff-Appellant, v. SHELL OIL COMPANY et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

483 F.2d 1140 (1973)

Ralph H. LITTLEJOHN, Jr., Plaintiff-Appellant, v. SHELL OIL COMPANY et al., Defendants-Appellees.

No. 71-2090.

United States Court of Appeals, Fifth Circuit.

August 10, 1973.

Certiorari Denied December 17, 1973.

COPYRIGHT MATERIAL OMITTED

Jay M. Vogelson, Dallas, Tex., Thomas R. Hartnett, III, Irving, Tex., for plaintiff-appellant.

William Simon, John S. Kingdon, Washington, D. C., Donald L. Case, Dallas, Tex., for Shell Oil Co.

Khent H. Rowton, Dallas, Tex., for American Oil Co.

Charles H. Gullett, Denison, Tex., for Sooner Oil Co.

Before JOHN R. BROWN, Chief Judge, and WISDOM, GEWIN, BELL, THORNBERRY, COLEMAN, GODBOLD, SIMPSON, MORGAN, CLARK, INGRAHAM and RONEY, Circuit Judges.^*

Certiorari Denied December 17, 1973. See 94 S.Ct. 849.

BELL, Circuit Judge:

The judgment of the district court dismissing the claim asserted by plaintiff Littlejohn under § 2(a) of the Clayton Act as amended by the Robinson-Patman Act, 15 U.S.C.A. § 13(a), was reversed by a panel decision of this court. Littlejohn v. Shell Oil Company, 5 Cir., 1972, 456 F.2d 225. Upon consideration of the cause en banc, we vacate the panel decision for reasons to be hereinafter stated.

In sum, we affirm the ruling of the district court that it was without subject matter jurisdiction under the Act absent proof that at least one of each of defendants challenged sales transactions occurred in commerce.¹ We disagree with the panel majority that the interstate sale requirement of the Act may be satisfied by showing the use of profits derived from interstate commerce to underwrite the local price cutting activity. To this extent, we are in agreement with the views of the dissenting members of the panel. We do agree, however, with the majority of the panel that the discovery proceedings were truncated, albeit inadvertently. We thus vacate the judgments of dismissal and remand with direction that plaintiff be allowed a reasonable period of time within which to complete his discovery but on conditions to be stated in Part III, infra.

Plaintiff alleged that he operated an independent gas station in Garland, Texas which is in the northern portion of Dallas County. He also alleged that defendants, through two other stations within one half mile of his station, one selling the products of Shell Oil Company and the other selling the products of American Oil Company, began to sell gasoline to the general public in June 1970 at prices reduced below his selling price although defendants were selling, respectively, Shell and American gasoline, to other dealers in the general Dallas area at normal prices. He alleged that the purpose of defendants in so doing was to drive him out of business and that he was, in fact, forced to close his station because he could not meet the competition engendered by the low prices being charged at the two stations.²

The original complaint alleged that Shell and American were marketing gasoline in interstate commerce. There was no allegation, however, that the gasoline delivered to the Shell and American stations in the Dallas area had moved in interstate commerce, or that, with respect to each defendant, at least one sale in interstate commerce was involved. Some months later plaintiff amended his complaint to amplify on his original allegation that profits of defendants Shell and American, derived from their interstate operations, were used by each of them to support their acts of selling gasoline to plaintiff's competitors at the two stations in question at lower prices than were being charged by them to other Shell and American stations in the Dallas area. The amended complaint alleged that Sooner, a Texas corporation with its principal place of business in Oklahoma, was engaged in interstate commerce and was also using its interstate profits to support the price cutting in question.

As distilled, we conclude that at this point, plaintiff had alleged a classic case of violation of § 2(a) by discrimination in sales at wholesale by sellers to their purchasers who competed with plaintiff, and with resulting injury to his business within the contemplation of § 4 of the Clayton Act. 15 U.S.C.A. § 15. See Fn. 3, infra.

Defendants duly answered. Meanwhile the district court conducted a pre-trial conference and became aware of the possible lack of subject matter jurisdiction in view of the absence of an allegation that, as to each defendant, at least one of the contended discriminatory sales was in interstate commerce. All parties filed briefs on the question. Plaintiff did not allege such interstate sales but relied instead, in the main, on "the use of interstate profits to underwrite" theory expressed in Moore v. Mead's Fine Bread, 1954, 348 U.S. 115, 75 S.Ct. 148, 99 L.Ed. 145. Each defendant filed an affirmative defense on the ground that none of the sales were in interstate commerce and thus the issue was clearly drawn. The district court then granted summary judgment for each of the defendants on the basis of the absence of subject matter jurisdiction.³

I.

In reaching decision on the Robinson-Patman Act coverage question which is presented, we must have in mind the difference between the reach of the Sherman Act, 15 U.S.C.A. §§ 1-4, and the reach of § 2(a) of the Robinson-Patman Act, 15 U.S.C.A. § 13(a). We pointed out the difference in Lehrman v. Gulf Oil Company, 5 Cir., 1972, 464 F.2d 26, 36-37, as modified on rehearing. There we quoted from Cliff Food Stores, Inc. v. Kroger, Inc., 5 Cir., 1969, 417 F.2d 203, 208-209, in saying:

"To maintain an action under Section 13(a) the plaintiff must allege and prove, inter alia: (1) That the defendant is engaged in commerce; (2) that, in the course of such commerce, the defendant has discriminated in price between different purchasers of commodities of like grade and quality; (3) that `either or any of the purchases involved in such discrimination are in commerce\'; and (4) that there is likely to be a severe, adverse effect on competition. (Emphasis added.) 15 U.S.C. § 13(a). The language of Act — requiring discriminatory sales to be `in commerce\' — is far narrower in scope than the `effect on commerce\' test applicable under the Sherman Antitrust Act. See, e. g., Foremost Dairies, Inc. v. FTC, 5th Cir. 1965, 348 F.2d 674; Jones v. Metzger Dairies, Inc., 5th Cir. 1964, 334 F.2d 919. In appropriate cases, the Sherman Act may be applied to intra-state activities, including retail sales, if they affect interstate commerce. See, e. g., United States v. Greater Kansas City Retail Coal Merchants\' Ass\'n, W.D.Mo. 1949, 85 F. Supp. 503. Under the terms of section 13(a), however, at least one of the sales alleged to be discriminatory must actually be in interstate commerce. Walker Oil Co. v. Hudson Oil Co., 5th Cir. 1969, 414 F.2d 588 Dated July 8, 1969. In Hiram Walker, Inc. v. A & S Tropical, Inc., 5th Cir. 1969, 407 F.2d 4 Dated January 31, 1969, this Court stated:

"In order to come within the provisions of the Robinson-Patman Act, the plaintiff must demonstrate that the discriminatory sales were `in commerce.\' * * *

Thus, the Robinson-Patman Act, is applicable only where the allegedly discriminatory transactions took place in interstate commerce. That is, `* * * at least one of the two transactions which, when compared, generate a discrimination must cross a state line.\'

See also Borden Company v. FTC, 7th Cir. 1964, 339 F.2d 953; Willard Dairy Corp. v. National Dairy Products Corp., 6th Cir. 1962, 309 F.2d 943."

Taking the Lehrman opinion and the Cliff Food Stores language as a text, it is plain that plaintiff failed to allege the sine qua non of subject matter jurisdiction, that at least one of the sales involved in the alleged discrimination by the defendants, i. e., between the defendants and their respective Dallas gasoline dealers, was in interstate commerce. This much is conceded by plaintiff.⁴

II.

The question remains whether the holding of the Supreme Court in Moore v. Mead's Fine Bread Company, supra, creates an exception to the statutory requirement that there be at least one discriminatory interstate sale.

It is here that we disagree with plaintiff and with the panel decision. The exception would purportedly rest on the theory of the discriminator using profits from interstate activities to underwrite the losses sustained in driving a competitor out of business through local price-cutting. There is a statement to this effect in Moore v. Mead's Fine Bread, 348 U.S. at 119-120, 75 S.Ct. at 150. The statement has, however, generally been treated as dictum. See e. g., Cliff Food Stores, Inc. v. Kroger, Inc., supra, 417 F.2d at 209; Willard Dairy Corp. v. National Dairy Products Corp., 6 Cir., 1962, 309 F.2d 943; Central Ice Cream Co. v. Golden Rod Ice Cream Co., 7 Cir., 1961, 287 F.2d 265; Food Basket, Inc. v. Albertson's, Inc., 10 Cir., 1967, 383 F.2d 785; Belliston v. Texaco, Inc., 10 Cir., 1972, 455 F.2d 175.

This view of the Moore v. Mead's Fine Bread case follows from the facts of that case which demonstrate that the commerce requirements necessary to establish § 2(a) jurisdiction were satisfied, i. e., (1) the defendant was engaged in commerce; (2) the defendant had discriminated in price between different purchasers of commodities of like grade and quantity; and (3), that one of the purchases involved in such discrimination was in commerce. It is to be noted that proposition numbered (3) was not lacking. This much appears from a statement in the opinion. The price cutting against the competitor was in New Mexico but the discriminator was selling at a higher price in Texas out of its same New Mexico bakery. Moore v. Mead's Fine Bread is a landmark case in that it explicated the coverage of § 2(a) to protect the competitor of a purchaser who purchased from one seeking to destory the competitor by price cutting. The case did not, however, alter or extend the specific jurisdictional requirements of § 2(a).⁵

III.

Lastly, we come to...