GREATER ROCKFORD ENERGY & TECHNOLOGY v. Shell Oil

• Decision Date: 24 April 1992
• Docket Number: No. 90-3119.,90-3119.
• Parties: GREATER ROCKFORD ENERGY AND TECHNOLOGY CORP., Shepherd Oil Inc., Vidalia Ethanol, Ltd., Alpebo, Inc., Shreveport Ethanol, Inc., Lakefield Ethanol, Inc., A.E. Montana, Inc., Cepo, Inc., Texas Ethanol Producers, Wurster Oil Co., High Plains Corporation, Cajun Energy, Inc., Public Terminals, Inc., and People of the State of Illinois, Plaintiffs, v. SHELL OIL COMPANY, Marathon Petroleum Company, Amoco Oil Company, Chevron, U.S.A., Inc., Atlantic Richfield Co., B.P. America, Citgo Petroleum Corp., Diamond Shamrock R & M, Inc., Exxon Company USA, Mobil Corporation and Sinclair Oil Corp., Defendants.
• Court: U.S. District Court — Central District of Illinois

790 F. Supp. 804

GREATER ROCKFORD ENERGY AND TECHNOLOGY CORP., Shepherd Oil Inc., Vidalia Ethanol, Ltd., Alpebo, Inc., Shreveport Ethanol, Inc., Lakefield Ethanol, Inc., A.E. Montana, Inc., Cepo, Inc., Texas Ethanol Producers, Wurster Oil Co., High Plains Corporation, Cajun Energy, Inc., Public Terminals, Inc., and People of the State of Illinois, Plaintiffs, v. SHELL OIL COMPANY, Marathon Petroleum Company, Amoco Oil Company, Chevron, U.S.A., Inc., Atlantic Richfield Co., B.P. America, Citgo Petroleum Corp., Diamond Shamrock R & M, Inc., Exxon Company USA, Mobil Corporation and Sinclair Oil Corp., Defendants.

No. 90-3119.

United States District Court, C.D. Illinois, Springfield Division.

April 24, 1992.

COPYRIGHT MATERIAL OMITTED

Wendell W. Wright, Wright & Wright, Danville, Ill., Bob F. Wright, Domengeaux & Wright, Lafayette, La., Lloyd W. Gathings, Gathings & Davis, Birmingham, Ala., Gregg R. Potvin, Taylor Thiemann & Aitken, Washington, D.C., Wayne M. Liao, Spiegel Liao & Kagay, San Francisco, Cal., for Greater Rockford Energy & Technology Corp., Vidalia Ethanol Ltd., Alpebo, Inc., Shreveport Ethanol, Inc., Lakefield Ethanol, Inc., A.E. Montana, Inc., Cepo, Inc., Texas Ethanol Producers, Wurster Oil Co., Inc. and High Plains Corp.

Peter M. Sfikas, Peterson & Ross, Chicago, Ill., Carl D. Haggard, Shell Oil Co., A.M. Minotti, Shell Oil Co., Ann Spiegel, Houston, Tex., for Shell Oil Co.

John H. Stroh, Dan D. Sandman, Findlay, Ohio, Ronald Teeple, John Leonard, Defrees & Fiske, Chicago, Ill., for Marathon Petroleum Co.

Thomas A. Gottschalk, David A. Rammelt, J. Andrew Langan, Kirkland & Ellis, Martin J. Keating, Michael E. Rigney, Chicago, Ill., Robert E. Gillespie, Hinshaw & Culbertson, Springfield, Ill., Amy J. Berenson, Kirkland & Ellis, Washington, D.C., for Amoco Oil Co.

Thomas W. Kelty, Pfeifer & Kelty P.C., Springfield, Ill., John E. Bailey, Keith E. Parks, Mark A. Cervenka, Chevron Corp., David L. Ream, Houston, Tex., John H. Long, Long Morris Myers & Rabin P.C., Springfield, Ill., for Chevron U.S.A. Inc.

Donald A. Brigh, Dean M. Harris, Atlantic Richfield Co., Los Angeles, Cal., for Atlantic Richfield Co.

Joseph Dattilo, Cleveland, Ohio, for B.P. America.

Robert G. Abrams, Joanne E. Caruso, Howrey & Simon, Washington, D.C., for Exxon Co. USA.

Jeffery M. Cross, Patrick J. Ahern, Mary Clare Bonaccorsi, Ross & Hardies, Chicago, Ill., Edward H. Beck, Fairfax, Va., R. Gerald Barris, Sorling Northrup Hanna Cullen & Cochran, Ltd., Springfield, Ill., for Mobil Oil Corp.

A. James Shafter, Kehart Shafter Hughes & Webber P.C., Scott A. Roberts, Decatur, Ill., for Archer Daniels Midland Co.

Neil Hartigan, Asst. Atty. Gen., Springfield, Ill., Bart T. Murphy, Asst. Atty. Gen., Robert E. Davy, Jr., Lison & Pullman, John McCaffrey, Atty. Gen. Office, Citizens Rights Div., Chicago, Ill., for the People of State of Ill.

Leslie J. Schiff, D. Patrick Keating, Sandoz, Sandoz & Schiff, Opelousas, La., for Cajun Energy, Inc., and Public Terminals Inc.

David R. Samuelsen, Poole & Samuelsen, Boise, Idaho, for Ethanol Marketing.

OPINION

RICHARD MILLS, District Judge:

The arcane mysteries of antitrust standing.

And — like all legal concepts — there is a chameleon quality to this principle.

Antitrust law might be summarized as a great, albeit maddeningly imprecise, panacea of the anticompetitive ailments of free enterprise.

"Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms." United States v. Topco Associates, Inc., 405 U.S. 596, 610, 92 S.Ct. 1126, 1135, 31 L.Ed.2d 515 (1972).

"One problem presented by the language of § 1 of the Sherman Act is that it cannot mean what it says. The statute says that `every' contract that restrains trade is unlawful. But, as Mr. Justice Brandeis perceptively noted, restraint is the very essence of every contract; read literally, § 1 would outlaw the entire body of private contract law...." National Soc. of Professional Engineers v. United States, 435 U.S. 679, 687-688, 98 S.Ct. 1355, 1363, 55 L.Ed.2d 637 (1978) (footnotes omitted).

While the Supreme Court has stated that "it is virtually impossible to announce a black-letter rule that will dictate the result in every case," the Supreme Court has identified the relevant factors to be considered. Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 536, 103 S.Ct. 897, 908-911, 74 L.Ed.2d 723 (1983).

This matter is before the Court on a joint summary judgment motion on behalf of all Defendants based on Plaintiffs' alleged lack of antitrust injury and standing.

The bottom line: Allowed. Case dismissed.

I. BACKGROUND

Parties

More than 70 lawyers have now appeared in this case. Over 750 pleadings have been filed producing a case file which, if placed in a single stack, would exceed twelve feet in height.

Since this case presents a classic example of the saying "you can't tell the players without a program," we start with a review of that "program."

Plaintiffs and Plaintiff-Intervenors (hereafter referred to collectively as "Plaintiffs") fall into three basic groups: ethanol producers, gasohol blenders, and the State of Illinois.

Plaintiffs Greater Rockford Energy and Technology Corporation, Shepherd Oil, Inc., Vidalia Ethanol, Ltd., Alpebo, Inc., Shreveport Ethanol, Inc., Lakefield Ethanol, Inc., A.E. Montana, Inc., CEPO, Inc. and Texas Ethanol Producers, are ethanol producers and/or sellers. Plaintiff-Intervenor Wurster Oil Company, Inc. is a gasohol blender and has sold to distributors, but it is apparently suing only in its capacity as a seller of ethanol.

Plaintiff-Intervenors Cajun Energy, Inc. and Public Terminals, Inc. are gasohol blenders who sell to distributors and dealers.

Plaintiff State of Illinois has intervened as a Plaintiff "on behalf of all Illinois citizens, the State of Illinois and its political subdivisions."

The Defendants are major oil companies and all are members of the American Society for Testing and Materials (ASTM) and the American Petroleum Institute (API). Defendants are Shell Oil Company, Marathon Petroleum Co., Amoco Oil Company, Chevron U.S.A., Inc., Atlantic Richfield Co., B.P. America, Exxon Company U.S.A. and Mobil Corporation.

In addition to the parties described above, three parties made unsuccessful attempts to intervene as Plaintiffs and several Defendants settled out. Furthermore, diversity between the Plaintiffs and the Defendants is not complete.

Complaints

The complaints of all Plaintiffs contain essentially the same five counts:

Count I alleges a contract, combination or conspiracy in violation of section 1 of the Sherman Antitrust Act.

Count II alleges violations of section 26a of the Clayton Antitrust Act (the Gasohol Competition Act of 1980).

Count III alleges monopolization activities in violation of section 2 of the Sherman Antitrust Act.

Count IV alleges violations of the Illinois Fraud and Deceptive Practices Act and monopolization activities in violation of the Illinois Antitrust laws.

Count V alleges commercial disparagement in violation of the Illinois Fraud and Deceptive Practices Act.

Plaintiffs seek treble damages in the amount of 2.85 billion dollars as well as various injunctive relief.

The original complaint was filed on June 1, 1988 in the Danville Division of the Central District of Illinois by Plaintiffs Greater Rockford Energy and Technology Corporation, Shepherd Oil, Inc., Vidalia Ethanol, Ltd., Alpebo, Inc., Shreveport Ethanol, Inc., Lakefield Ethanol, Inc. and A.E. Montana, Inc. All of these original Plaintiffs are — or were — ethanol producers. Other Plaintiffs were allowed to intervene later, including the State of Illinois which filed its complaint on March 2, 1990. This case was reassigned to this judge and division on May 21 of the same year.

The State of Illinois claims to have been injured as follows:

a. Illinois motorists and motorists nationwide have been forced to pay higher prices at the pump for motor fuel than they would have had to pay, if defendants had not suppressed competition between gasohol and gasoline in the motor fuel marketplace.

b. Illinois citizens engaged in the production, distribution and sale of ethanol and gasohol have lost jobs and profits as a result of defendants' illegal activities.

c. Illinois farmers and others connected with the agricultural economy of Illinois have lost jobs and profits as a result of the decreased production and sale of corn, more than would have occurred had defendants not substantially prevented the widespread entry of ethanol and gasohol into the mainstream of the motor fuel industry.

d. The quality of the environment and the public health have been adversely affected by defendants' exclusionary activities. Gasoline blended with 10% ethanol significantly reduces harmful emissions of carbon monoxide from motor vehicles into the atmosphere. In addition, ethanol is a more efficient and safer octane enhancer than those used by defendants. Due to the suppression of ethanol from the motor fuel market, Illinois citizens and citizens across the nation have been deprived of the health benefits of gasohol.

e. The local governments of Illinois, the State of Illinois itself and ultimately Illinois taxpayers have had to expend larger sums of money and will have to spend even greater sums of money to comply with the federal Clean Air Standards because of the greater pollution of the atmosphere from the burning of gasoline as opposed to gasohol.

f. The general economy of the State of Illinois has been injured and damaged because of the loss of economic development that the State would have enjoyed if the ethanol industry had not been severely crippled by defendants' conduct. Illinois is now and has been capable of

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