906 F.2d 432 (9th Cir. 1990), 86-6776, In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation

Docket Nº:86-6776, 86-6779, 86-6780, 86-6783 and 86-6784.
Citation:906 F.2d 432
Party Name:In re COORDINATED PRETRIAL PROCEEDINGS IN PETROLEUM PRODUCTS ANTITRUST LITIGATION. STATE OF ARIZONA, Plaintiff-Appellant, v. STANDARD OIL CO. OF CALIFORNIA; Texaco, Inc.; Union Oil Co. of California; Atlantic Richfield Co.; Exxon Corp.; Mobil Oil Corp.; and Shell Oil Co., Defendants-Appellees, and Continental Oil Co.; Gulf Oil Corp.; Phillips Petro
Case Date:June 22, 1990
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 432

906 F.2d 432 (9th Cir. 1990)

In re COORDINATED PRETRIAL PROCEEDINGS IN PETROLEUM PRODUCTS

ANTITRUST LITIGATION.

STATE OF ARIZONA, Plaintiff-Appellant,

v.

STANDARD OIL CO. OF CALIFORNIA; Texaco, Inc.; Union Oil

Co. of California; Atlantic Richfield Co.; Exxon

Corp.; Mobil Oil Corp.; and Shell Oil

Co., Defendants-Appellees,

and

Continental Oil Co.; Gulf Oil Corp.; Phillips Petroleum

Co.; Caribou Four Corners, Inc.; and Powerine

Oil Co., Defendants.

STATE OF CALIFORNIA, Plaintiff-Appellant,

v.

STANDARD OIL CO. OF CALIFORNIA; Texaco, Inc.; Union Oil

Co. of California; Exxon Corp.; Gulf Oil Corp.;

Mobil Oil Corp.; and Shell Oil Co.,

Defendants-Appellees,

and

Atlantic Richfield Co.; Getty Oil Co.; and Phillips

Petroleum Co., Defendants.

STATE OF OREGON, on behalf of itself, its residents and all

political subdivisions within the State similarly

situated, Plaintiff-Appellant,

v.

STANDARD OIL CO. OF CALIFORNIA; Texaco, Inc.; Union Oil

Co. of California; Atlantic Richfield Co.; Exxon

Corp.; Mobil Oil Corp.; and Shell Oil

Co., Defendants-Appellees,

and

Getty Oil Co.; Gulf Oil Corp.; and Phillips Petroleum Co.,

Defendants.

STATE OF WASHINGTON, on behalf of itself and its public

entities and residents, Plaintiff-Appellant,

v.

STANDARD OIL CO. OF CALIFORNIA; Texaco, Inc.; Union Oil

Co. of California; Atlantic Richfield Co.; Exxon

Corp.; Gulf Oil Corp.; Mobil Oil

Corp.; Shell Oil Co.,

Defendants-Appellees,

and

Getty Oil Co.; and Phillips Petroleum Co., Defendants.

Nos. 86-6776, 86-6779, 86-6780, 86-6783 and 86-6784.

United States Court of Appeals, Ninth Circuit

June 22, 1990

Argued and Submitted July 15, 1988.

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Page 434

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Page 435

Michael I. Spiegel, argued, Wayne M. Liao, Charles M. Kagay, Spiegel Liao & Kagay, San Francisco, Cal., Robert K. Corbin, Atty. Gen., Alison J. Butterfield, Chief Counsel, Antitrust Div., and Gary P. Brady, Asst. Atty. Gen., Phoenix, Ariz., for plaintiff-appellant State of Ariz.

John K. Van De Kamp, Atty. Gen., Andrea Sheridan Ordin, Chief Asst. Atty. Gen., Sanford N. Gruskin, Asst. Atty. Gen., Thomas P. Dove, Lawrence R. Tapper, Mary Elizabeth Alden, and H. Chester Horn, Jr., Deputy Attys. Gen., Sacramento, Cal., for plaintiff-appellant State of Cal.

Dave Frohnmayer, Atty. Gen., Michael D. Reynolds, David L. Slader, and Paul J. Sundermeier, Asst. Attys. Gen., Salem, Or., for plaintiff-appellant State of Or.

Kenneth O. Eikenberry, Atty. Gen., and John R. Ellis, Deputy Atty. Gen., Seattle, Wash., for plaintiff-appellant State of Wash.

Robert A. Mittelstaedt, argued, Roderick M. Thompson, and Craig E. Stewart, Pillsbury, Madison & Sutro, San Francisco, Cal., for defendant-appellee Chevron Corp. (formerly Standard Oil Co. of California).

Otis Pratt Pearsall, Philip H. Curtis, Bruce R. Kelly, Hughes, Hubbard & Reed, New York City, Ronald C. Redcay, Hughes, Hubbard & Reed, Los Angeles, Cal., and Donald A. Bright, Los Angeles, Cal., for defendant-appellee Atlantic Richfield Co.

Charles W. Matthews, Houston, Tex., Philip K. Verleger, and David A. Destino, McCutchen, Black, Verleger & Shea, Los Angeles, Cal., for defendant-appellee Exxon Corp.

Harry P. Davis, Jr., Houston, Tex., for defendant-appellee Chevron Corp. (formerly Gulf Oil Corp.).

Andrew J. Kilcarr, Maureen O'Bryon, Janet McDavid, Hogan & Hartson, Washington, D.C., and Charles F. Rice, New York City, for defendant-appellee Mobil Oil Corp.

William R. O'Brien, Robert M. Bruskin, Howrey & Simon, Washington, D.C., and Raymond V. McCord, Los Angeles, Cal., for defendant-appellee Shell Oil Co.

G. Kenneth Handley, Robert D. Wilson, White Plains, N.Y., and Leslie C. Randall, Universal City, Cal., for defendant-appellee Texaco Inc.

Darryl Snider, Henry J. Kupperman, Scott P. Koepke, Brobeck, Phleger & Harrison, Los Angeles, Cal., William J. Taylor, Brobeck, Phleger & Harrison, San Francisco, Cal., Harold E. Zahner, and Robert G.

Page 436

Pott, Los Angeles, Cal., for defendant-appellee Union Oil Co. of California.

Appeal from the United States District Court for the Central District of California.

Before WALLACE, NELSON, and REINHARDT, Circuit Judges.

NELSON, Circuit Judge:

The States of Arizona, California, Oregon, and Washington appeal from the district court's grant of summary judgment to the defendants in these consolidated antitrust actions. For the reasons stated below, we reverse the judgment of the district court and remand for further proceedings.

I. INTRODUCTION

Between June 1975 and August 1977, the plaintiffs filed their complaints in these actions, alleging several violations of the Sherman Act, 15 U.S.C. Sec. 1 et seq. As developed during the subsequent pretrial proceedings, the plaintiffs' allegations fall into three categories. First, the plaintiffs allege that the defendant oil companies conspired to raise or stabilize prices for refined oil products in violation of Sec. 1 of the Sherman Act, 15 U.S.C. Sec. 1. The plaintiffs assert that, in furtherance of this conspiracy, the defendants continually engaged in the mutual exchange of pricing and price-related information. Second, the plaintiffs allege that the defendants conspired to create, by various means, an artificial scarcity of crude oil and refined oil products in the western United States, in violation of Secs. 1 & 2 of the Sherman Act, 15 U.S.C. Secs. 1 & 2. Third, the plaintiffs allege that the defendants conspired not to compete in bidding on the plaintiffs' annual bulk sale petroleum supply contracts, in violation of Sec. 1 of the Sherman Act.

After several years of extensive discovery, the plaintiffs filed in January 1983 a three volume pretrial brief ("Plaintiffs' Initial Pretrial Brief" or "PIPB"), setting out their analysis of what the evidence would prove. The PIPB was supplemented on several occasions. In July 1983, the defendants moved for summary judgment, asserting that the evidence as summarized in the PIPB failed to raise a triable issue of antitrust conspiracy. After three days of oral argument on the summary judgment motions, the district court took the matter under submission. On November 25, 1986, the court filed an opinion and order granting the defendants' summary judgment motion in its entirety. In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 656 F.Supp. 1296 (C.D.Cal.1986) [hereinafter Petroleum Prods.]. The plaintiffs have timely appealed.

Before turning to an analysis of the proper summary judgment standards and their application in this case, we think it appropriate and useful first to outline certain background facts concerning the industry's structure as well as the nature of appellants' theory concerning the operation of the alleged conspiracy.

The appellees are major oil companies which, among other activities, produce crude oil, refine it into gasoline, and sell the gasoline to various distributors. During the time periods relevant to this appeal, these distributors fell into roughly four classes: (1) independent service station owners who operated franchises selling one particular brand of gasoline; (2) company-owned service stations run by company employees; (3) independent "jobbers" or brokers who resold gasoline to various service stations and other purchasers; and (4) governmental entities and others who purchased under bulk sales contracts. All parties agree that the lion's share of appellees' gasoline that was sold at retail was sold by independent franchised service stations.

As franchisees, these "independent" dealers were not free to purchase their supply of gasoline from any oil company at any time; as long as they remained franchisees they could only purchase from their particular franchisor. Each company sold gasoline to its franchised dealers at a price known as the "dealer tankwagon price." In actuality, the official tankwagon prices were only occasionally changed; fluctuations in the cost of gasoline to franchised dealers were more frequently reflected in

Page 437

changes to the applicable discounts from the tankwagon price. These discounts were variously known as "temporary dealer assistance," "dealer aid," or simply "discounts."

The appellants argue that, as a consequence of this market structure, each oil company was effectively able to control the retail price at which its gasoline was sold. That is, the appellants claim that, although individual dealers "showed varying degrees of independence," an oil company could essentially determine the retail price by setting the applicable discount from the tankwagon price at which it sold gasoline to its franchised dealers.

In the present actions, the appellants claim that the appellees have engaged in a conspiracy to raise and stabilize the retail price of gasoline at the pump. They do not claim, however, that the appellees engaged in a resale price maintenance scheme whereby each dealer was required to charge a predetermined price; indeed, they have expressly disavowed such a theory. Rather, the appellants claim that the appellees conspired to fix retail prices by coordinating dealer discounts from the tankwagon price.

The parties hotly contest on appeal whether the application of this theory is limited by the Supreme Court's decision in Illinois Brick v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), which held that indirect purchasers of goods whose price was fixed earlier in the stream of commerce may not maintain an antitrust damages action for overcharges passed on to them by those who purchase directly from the...

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