In re Petroleum Products Antitrust Litigation, MDL No. 150-WPG.

• Decision Date: 25 November 1986
• Docket Number: MDL No. 150-WPG.
• Citation: 656 F. Supp. 1296
• Parties: In re COORDINATED PRETRIAL PROCEEDINGS IN PETROLEUM PRODUCTS ANTITRUST LITIGATION.
• Court: U.S. District Court — Central District of California

656 F. Supp. 1296

In re COORDINATED PRETRIAL PROCEEDINGS IN PETROLEUM PRODUCTS ANTITRUST LITIGATION.

MDL No. 150-WPG.

United States District Court, C.D. California.

November 25, 1986.

Alison B. Swan, Chief Counsel, Antitrust Div., Office of the Attorney General, Phoenix, Ariz., on behalf of the State of Ariz.

Office of the Attorney General John Van de Kamp by William S. Clark, Deputy Atty. Gen., Thomas P. Dove, Deputy Atty. Gen., Dept. of Justice, State of Cal., San Francisco, Cal., Sanford Gruskin, Deputy Atty. Gen., Dept. of Justice, State of Cal., Los Angeles, Cal., and Spiegel, Cutler, Liao & Kagay by Michael I. Spiegel, et al., San Francisco, Cal., on behalf of State of Cal.

James Smith, Atty. Gen. by Jerome W. Hoffman, Asst. Atty. Gen., Dept. of Legal Affairs, Tallahassee, Fla., and Larry H. Evans, Chief, Antitrust Section, State of Fla., Dept. of Legal Affairs, Tallahassee, Fla., and Stephen L. Dunne, Del Mar, Cal., on behalf of State of Fla.

Dave Frohnmayer, Atty. Gen. by Richard L. Casell, Chief Counsel, Antitrust Div., Salem, Or., on behalf of State of Or.

Ken Eikenberry, Atty. Gen. by John R. Ellis, Asst. Atty. Gen., Consumer Protection and Antitrust Div., State of Wash., Seattle, Wash., on behalf of State of Wash.

Hughes, Hubbard & Reed, New York City, by Otis Pratt Pearsall, Philip H. Curtis, Bruce R. Kelly, Linda Trummer-Napolitano, and Hughes, Hubbard & Reed, by Ronald C. Redcay, Matthew T. Heartney, and Donald A. Bright, Associate Gen. Counsel, Howard S. Fredman, Thomas H. Reilly, Legal Dept., Atlantic Richfield Co., Los Angeles, Cal., on behalf of Atlantic Richfield Co.

McCutchen, Black, Verleger & Shea, Los Angeles, Cal., by Philip A. Verleger, David A. Destino, and Charles W. Matthews, House Counsel, Exxon Co. U.S.A., Houston, Tex., on behalf of Exxon Corp.

John E. Bailey, Harry P. Davis, Jr., Law Dept., Houston, Tex., on behalf of Chevron U.S.A. (Gulf Oil Co.).

Hogan & Hartson, Washington, D.C. by Andrew J. Kilcarr, Maureen O'Bryon, and Charles F. Rice, Asst. Gen. Counsel, Charles B. Straus, III, Counsel, New York City, on behalf of Mobil Oil Corp.

Howrey & Simon, Washington, D.C. by William Simon, William O'Brien, Robert M. Bruskin, and William Winters, Robert J. Decker, Corporate Law/Sec, Houston, Tex., on behalf of Shell Oil Co.

Pillsbury, Madison & Sutro, San Francisco, Cal., by Robert P. Taylor, Robert A. Mittelstaedt, Roderick M. Thompson, and Smathers & Thompson, Miami, Fla. by David Batcheller, on behalf of Standard Oil Co. of Cal.

Leslie C. Randall, Texaco, Inc., Los Angeles, Cal., and R.D. Wilson, G. Kenneth Handley, Texaco, Inc., White Plains, N.Y., and Kaye, Scholer, Fierman, Hays & Handler, New York City by Barry Wilner, Aton Arbisser, on behalf of Texaco, Inc.

Brobeck, Phleger & Harrison, San Francisco, Cal. by John Sparks, and Brobeck, Phleger & Harrison by Darryl Snider, and E.A. McFadden, Harold E. Zahner, House Counsel, Union Oil Co., and Robert G. Pott, Asst. Counsel, Union Oil Co., Los Angeles, Cal., on behalf of Union Oil Co.

GRAY, District Judge.

In this long pending litigation, the Attorneys General of the plaintiff States charge the defendant major oil companies with violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The contentions are that these defendants conspired to fix the retail prices of gasoline, to create in this country shortages, either actual or purported, of petroleum products, and to refrain from competing with each other for contracts for the sale of petroleum products to the plaintiff States and their governmental subdivisions. The defendants have moved for summary judgment on each of these issues; such motions were argued on November 19, 20 and 21, 1985; and the matter was taken under submission by the court. The defendants' motions now will be granted.

In the laborious process of reaching this decision, I have reread the extensive briefing on the motions, studied the transcript of the oral arguments, and examined all of the exhibits that were referred to in such arguments. Having done so, I am convinced that, after several years of exhaustive discovery, the plaintiffs simply do not have the proof necessary to establish their contentions.

The plaintiffs have disclosed no direct evidence of conspiratorial conduct and, with the exception of Florida, which will be discussed later, they almost admit such lack. Instead, in their pretrial briefs and their opposition memoranda, the plaintiffs rely upon certain factual items and comments selected from the mass of documentary and deposition material that they have obtained. From this material they draw inferences favorable to their contentions and assert that they thereby have presented issues that must be resolved by a jury. In doing so, they embrace the proposition laid down in United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962), that "on summary judgment the inferences to be drawn from the underlying facts contained in such materials must be viewed in the light most favorable to the party opposing the motion."

However, such a process fails to meet the standard announced by the Supreme Court in Matsushita Electric Industrial Co. Ltd., et al. v. Zenith Radio Corp., et al., 475 U.S. 574, ___, 106 S.Ct. 1348, 1357, 89 L.Ed.2d 538 (1986), which was decided after the plaintiffs' documentary and oral presentations were submitted:

"To survive a motion for summary judgment ..., a plaintiff seeking damages for violation of § 1 must present evidence `that tends to exclude the possibility' that the alleged conspirators acted independently citing Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 1470, 79 L.Ed.2d 775 (1984). Respondents in this case, in other words, must show that the inference of conspiracy is reasonable in light of the competing inferences of independent action...."

As will be discussed in this memorandum, the defendants, in accordance with Fed.Rule Civ.Proc. 56(c), have made a substantial evidentiary showing that in all relevant respects they acted independently and in their individual interests. In the face of such showing, the plaintiffs have the burden of coming forward with "specific facts showing that there is a genuine issue for trial." Fed.Rule Civ.Proc. 56(e). The Supreme Court, in Zenith, also instructs us that under such circumstances the plaintiff "must do more than simply show that there is some metaphysical doubt as to the material facts, ..." and that "where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" 475 U.S. at ___, 106 S.Ct. at 1356 (1986).

Many of the inferences of collusion that the plaintiffs draw from the evidence must be categorized as non sequitur. Some of the inferences are based upon facts that could be considered to be in harmony with the existence of a conspiracy if the existence of a conspiracy be assumed. However, such facts are equally in harmony with competitively motivated individual conduct, and we know from Zenith that "conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy." 475 U.S. at ___, 106 S.Ct. at 1357 (1986). None of the facts relied upon by the plaintiffs constitute evidence "`that tends to exclude the possibility' that the alleged conspirators acted independently," as is required by Zenith.

In approaching the task of resolving these motions for summary judgment, I have kept fully in mind the injunction in Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962) that "summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles." On the other hand, I also am aware that Poller "merely teaches caution," Barnes v. Arden Mayfair Inc., 759 F.2d 676, 680 (9th Cir.1985) and that "if there is no genuine issue of material fact, and if the resisting party does not present a record sufficient to support a reasonable finding in his favor, a district court has a duty to grant the motion for summary judgment." Filco v. Amana Refrigeration Inc., 709 F.2d 1257, 1260 (9th Cir. 1983). This court is convinced that the foregoing quotation states the situation here concerned and that the duty to grant summary judgment follows accordingly.

In discussing the bases for my ruling, I cannot hope to advert to each of the hundreds of evidentiary items upon which the parties rely in pursuing and opposing the current motions. However, I shall undertake in somewhat general terms to discuss what the facts in the record show and do not show with respect to the alleged conspiracies. I also shall comment upon some specific factual contentions, in support of my representation that I have given careful consideration to the record, and in order to illustrate some of the difficulties that I have with the plaintiffs' case.

I. THE ALLEGED PRICE FIXING CONSPIRACY.

The defendants regularly refine gasoline which they sell to operators of retail service stations at what are called tank wagon prices. The retail dealers, in fixing the prices that they charge the consuming public, add to the tank wagon prices whatever they feel the traffic will bear, in light of prices charged by competing stations.

In times when supply is plentiful, prices tend to work their way downward as some dealers seek to increase their market shares by charging less, prompting competitors to do likewise. This downward trend is usually led by "independent" stations that are not affiliated with the defendant major oil companies.

If a retail gasoline dealer that sells the product of one of the majors fails to participate in these price reductions, his market share decreases, resulting in loss of income to him and his supplier. Accordingly, the defendant companies, in order to enable their dealers to remain competitive, share with...