Longview Refining Co. v. Shore

• Citation: 554 F.2d 1006
• Decision Date: 15 February 1977
• Docket Number: No. 5-17.,5-17.
• Parties: LONGVIEW REFINING COMPANY and Crystal Oil Company, Defendants-Appellants, v. W. R. (Bill) SHORE, d/b/a Shore Oil Products, et al., Plaintiffs-Appellees, Independent Terminal Operators Association, Amicus Curiae.
• Court: U.S. Temporary Emergency Court of Appeals

554 F.2d 1006

LONGVIEW REFINING COMPANY and Crystal Oil Company, Defendants-Appellants, v. W. R. (Bill) SHORE, d/b/a Shore Oil Products, et al., Plaintiffs-Appellees Independent Terminal Operators Association, Amicus Curiae.

No. 5-17.

Temporary Emergency Court of Appeals.

Argued November 22, 1976.

Decided February 15, 1977.

Donald B. Craven, Miller & Chevalier, Washington, D.C., with whom Louis Paine and Thomas W. Houghton, Butler, Binion, Rice, Cook & Knapp, Houston, Tex., and Thomas W. Hathaway, Hathaway & Jackson, Tyler, Tex., were on the brief for appellants.

Jack N. Price, Price & Williams, Austin, Tex., on the brief for appellees.

William H. Bode and William C. Lane, Jr., Batzell, Nunn & Bode, Washington, D.C., were on the brief for amicus curiae.

Before INGRAHAM, VAN OOSTERHOUT, and ESTES, Judges.

ESTES, Judge.

Plaintiffs-appellees, W. R. (Bill) Shore and 12 other separate parties,¹ are purchasers of gasoline and diesel fuel from one or more refineries, which products each of them resells to and through service stations for retail distribution to consumers. Defendant-appellant Longview Refining Company (Longview) operates a small refinery which has been a supplier of gasoline and/or diesel fuel for the respective plaintiffs at various periods of time. Defendant-appellant Crystal Oil Company acquired all of Longview's capital stock as of November 1, 1973.

The plaintiffs sought declaratory and injunctive relief and monetary damages for certain actions allegedly committed by defendants: (1) violations of the Economic Stabilization Act of 1970, as amended (Stabilization Act), 12 U.S.C. § 1904 note (1976 Supp.),² and the Emergency Petroleum Allocation Act of 1973, as amended (Allocation Act), 15 U.S.C. § 751 et seq. (1976 Supp.), and regulations thereunder; (2) violations of the Sherman and Clayton Acts; and (3) violations of the parties' supply contract and the termination provisions of Article 2.309(c) of the Texas Business and Commerce Code, V.T.C.A. Bus. & C. § 2.309(c) (1968).

The plaintiffs' original complaint was filed December 27, 1973.³ On May 7, 1974, the district court ordered the plaintiffs' first cause of action to be severed and advanced on the trial docket. The trial on the severed cause of action was held December 9-11, 1974.

Findings of Fact and Conclusions of Law were filed by the district court on January 22, 1976, and judgment was rendered February 23, 1976, for the plaintiffs against the defendants for $518,053.71, with interest from the date of judgment, attorney's fees to be determined following any appeal from the judgment, and all costs of court. On March 17, 1976, the district court granted the defendants' motion for a stay of execution of the judgment pending appeal to the Temporary Emergency Court of Appeals (TECA).⁴ Defendants filed a notice of appeal with this court on March 23, 1976.

Finding the judgment entered February 23, 1976, by the district court on plaintiffs-appellees' severed cause of action to be non-appealable without proper certification by the district court in accordance with Federal Rule of Civil Procedure (FRCP) 54(b), this court entered an order on June 24, 1976, dismissing the defendants-appellants' appeal. Acting upon plaintiffs' motion, the district court entered an order on August 10, 1976, dismissing the antitrust claims contained in the second and third causes of action (Sections IV and V of the Plaintiffs' Complaint) without prejudice to refiling. Based on that order's making the February 23, 1976 judgment final pursuant to the requirements of 28 U.S.C. § 1291, defendants filed a notice of appeal in this court on September 7, 1976.⁵ Since the plaintiffs' motion requested dismissal of the contract claims, the antitrust claims, and the claims against Atlantic Richfield Company and since the third cause of action contained in Section V of the Plaintiffs' Fifth Amended Complaint expressly deals with supply contract violations, the contract claims and those against Atlantic Richfield Company were dismissed. There being no further claims or causes of action in the district court, this court has jurisdiction over this appeal.

There are two basic periods of time during which the plaintiffs paid the defendants prices which allegedly constituted overcharges under the Stabilization Act and the Allocation Act. These two periods are: (1) the entire freeze period from June 13, 1973, through August 19, 1973;⁶ and (2) that portion of the pricing formula period from November 1, 1973, through February 28, 1974.⁷ The defendant Longview Refining Company allegedly overcharged the plaintiffs during the first freeze period, and Longview Refining Company and Crystal Oil Company allegedly overcharged the plaintiffs during the pricing formula period, November 1, 1973, through February 28, 1974.

In essence, plaintiffs' cause of action was based upon assertions: (1) that the defendant Longview Refining Company's charges to plaintiffs for gasoline and diesel fuels during the freeze period, from June 13 to August 19, 1973, were higher than the maximum allowable price under Executive Order No. 11723, June 13, 1973, 38 F.R. 15763 (June 15, 1973), as extended through August 19, 1973, at 38 F.R. 21933 (August 14, 1973), resulting in an overcharge to plaintiffs;⁸ and (2) that the defendants subsequently failed to comply with the Phase IV pricing formula established by the Cost of Living Council (CLC) at 6 CFR §§ 150.355-356 and continued by the Federal Energy Office (FEO), sometimes referred to in this opinion as Federal Energy Administration (FEA), in 10 CFR §§ 212.82-83, resulting in additional overcharges to the plaintiffs.⁹ Asserting that the overcharges were willful and intentional on the part of the defendants, the plaintiffs sought treble damages under Section 210 of the Stabilization Act.¹⁰

The district court found that defendant Longview intentionally and willfully overcharged during the freeze period the amount of $73,027.59. Apparently, the district court accepted the calculations of plaintiffs' CPA witness, Mr. Sanders, that the total overcharge was $.0125 x 5,842,207, i. e., the overcharge per gallon multiplied by the total gallonage of regular gasoline, premium gasoline, and diesel fuel purchased by plaintiffs June 13 through August 19, 1973.¹¹ According to Mr. Sanders, the $73,027.59 figure represents the total overcharges for all of the plaintiffs except one who did not provide his purchases for that period.¹²

In addition, the district court found that the plaintiffs had proved the defendants willfully violated the Phase IV pricing formula, 6 CFR § 150.356, and the Allocation Act's pricing formula, 10 CFR § 212.83(c)(2).¹³ The court accepted Mr. Sanders' calculation in Plaintiffs' Exhibit 6(b) that the overcharge through February, 1974, amounted to $99,656.98. Concluding that the overcharge must be presumed to be deliberate and not the result of bona fide error, rejecting the alternative of awarding damages not less than $100 nor more than $1,000, and exercising its power to treble the amount of the overcharge, the district court ordered that the plaintiffs recover $518,053.71 ($73,027.59 + $99,656.98) X 3 with interest. Conclusions of Law (C.L.) 15, 16.

The method for determining the existence and amount of any overcharge during the freeze and formula periods involved is different. During the freeze period, the price of covered petroleum products was required to be maintained at the level at which the seller had made at least ten per cent of the total sales to the same class of purchaser during the freeze base period, June 1 to June 8, 1973. Under the phase IV pricing formula which became effective at the end of the freeze period and continued under FEO regulations, the maximum allowable price was determined by reference to a complicated, changing formula which allocated refiners' increased costs to their covered products.¹⁴

Clearly, plaintiffs have the burden in this case to provide the specific data needed to prove the existence of an overcharge. Determining lawful prices during both the freeze period and the pricing formula period requires an interpretation of certain essential concepts and terms used in the regulations.¹⁵ The pricing formula, 10 CFR § 212.83, is extremely complex and its application calls for expertise.¹⁶ Thus, precise findings of fact by the district court are of paramount importance in this case.

In Kelley v. Everglades Drainage Dist., 319 U.S. 415, at 419, 63 S.Ct. 1141, at 1143, 87 L.Ed. 1485, at 1487 (1943), the Supreme Court stated that "the nature and degree of exactness of the findings required depends on the circumstances of the particular case." After noting facts which it would have been appropriate for the district court to consider, the Supreme Court held:

It may be that adequate evidence as to these matters is in the present record. On that we do not pass, for it is not the function of this court to search the record and analyze the evidence in order to supply findings which the trial court failed to make. Nor do we intimate that findings must be made on all of the enumerated matters or need be made on no others; . . . We hold only that there must be findings, stated either in the court's opinion or separately, which are sufficient to indicate the factual basis for the ultimate conclusion. (emphasis added)

319 U.S. at 421-422, 63 S.Ct. at 1145, 87 L.Ed. at 1489. In the case before this court, the district court's findings as to the facts relevant to the proof of any overcharges alleged in the plaintiffs' complaint are not sufficiently specific to substantiate concluding there was an overcharge by the defendants in any sum certain as to any individual plaintiff.

Willful Overcharge

In considering the overcharges the district court found that plaintiffs paid during the freeze and formula periods, the crucial question which must be examined initially is whether the alleged overcharge was willful (in either or...