Coastal Fuels of Puerto Rico, Inc. v. Caribbean Petroleum Corp.

• Decision Date: 02 March 1993
• Docket Number: No. 92-2301,92-2301
• Citation: 990 F.2d 25
• Parties: 1993-1 Trade Cases P 70,177 COASTAL FUELS OF PUERTO RICO, INC., Plaintiff, Appellant, v. CARIBBEAN PETROLEUM CORPORATION, et al., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 25

990 F.2d 25

1993-1 Trade Cases P 70,177

COASTAL FUELS OF PUERTO RICO, INC., Plaintiff, Appellant, v. CARIBBEAN PETROLEUM CORPORATION, et al., Defendants, Appellees.

No. 92-2301.

United States Court of Appeals, First Circuit.

Heard March 2, 1993.

Decided April 6, 1993.

Michael S. Yauch, Houston, TX, with whom John F. Malley, III, McConnell, Valdes, Kelley, Sifre, Griggs & Ruiz-Suria, Hato Rey, PR, and Neil O. Bowman, Miami, FL, were on brief for Coastal Fuels of Puerto Rico, Inc.

Ruben T. Nigaglioni with whom Jorge A. Antongiorgi, and Ledesma, Palou & Miranda, Hato Rey, PR, were on brief for Caribbean Petroleum Corp.

Juan F. Doval with whom Jorge R. Jimenez, Hato Rey, PR, and Miguel Garcia Suarez, Rio Piedras, PR, were on brief for Harbor Fuel Service, Inc. and Caribbean Fuel Oil Trading, Inc.

Before BREYER, Chief Judge, SELYA and CYR, Circuit Judges.

BREYER, Chief Judge.

Coastal Fuels of Puerto Rico buys marine fuel oil in San Juan and resells that oil to ocean-going liners at berth in San Juan Harbor. It brought this antitrust action against its local fuel oil supplier, Caribbean Petroleum Corporation ("CAPECO"), and two of its competitors, both of whom CAPECO supplies. Coastal basically claims that ever since October 1991, when Coastal entered the San Juan market, CAPECO has charged Coastal's two competitors prices that are significantly lower than the prices it charges Coastal. This unjustified price difference, says Coastal, violates the Robinson-Patman Act, 15 U.S.C. § 13, and the Sherman Act, 15 U.S.C. § 1. Coastal asked the district court to enter a preliminary injunction "requiring CAPECO to provide fuel oil to Coastal on terms and conditions no less favorable than those made available" to Coastal's competitors. The district court decided not to enter the injunction. Coastal appeals. We affirm the decision.

In deciding whether to issue a preliminary injunction, a district court must ask whether the plaintiff is likely to succeed on the merits, whether the plaintiff will otherwise suffer irreparable harm, whether the benefits of an injunction will, on balance, outweigh the burdens, and whether an injunction is consistent with the "public interest." Planned Parenthood League v. Bellotti, 641 F.2d 1006, 1009 (1st Cir.1981); Boston Celtics Ltd. Partnership v. Shaw, 908 F.2d 1041, 1048 (1st Cir.1990). This court will normally give the district court considerable leeway in making its decision, at least where, as here, the decision rests upon an exercise of judgment and a record that is incomplete. Indeed, normally we will reverse the district court's decision on such matters only if we are convinced that it "abused its discretion" or committed a "clear error" of fact or related law. See, e.g., Massachusetts Ass'n of Older Americans v. Sharp, 700 F.2d 749, 751-52 (1st Cir.1983). We can find no such error in the present case.

For one thing, Coastal's "likelihood of success on the merits," is, at best, uncertain. On the one hand, Coastal presented witnesses who testified to facts indicating significant price differences. They said that:

(1) After Coastal entered the San Juan market, the resale prices charged by its competitors (to the ships) dropped by nearly $1 per barrel;

(2) Coastal's competitors' resale prices were at, or below, the prices CAPECO charged Coastal;

(3) Coastal, though it had expected to earn profits, lost $1.3 million during its first ten months of operations;

(4) CAPECO (perhaps by mistake) once sent Coastal an invoice showing a price of $1.45 per barrel less than the price CAPECO charged Coastal;

(5) Two CAPECO executives told Coastal executives that CAPECO was charging Coastal's competitors lower prices than CAPECO charged Coastal.

On the other hand, the record is not at all specific about the prices charged. Nowhere does it contain figures, or even estimates, of the actual prices either Coastal, or Coastal's competitors paid for fuel oil. At the same time, it contains other evidence that militates against an eventual finding of unlawful behavior. Cross-examination of Coastal's witnesses revealed that, when CAPECO officials told them CAPECO charged Coastal's competitors less, the officials immediately added that the price differences reflected "different contract " terms. The evidence also shows that CAPECO's per barrel prices diminished as customers ordered in greater volumes--a kind of volume-related pricing apparently commonplace in the oil industry. Coastal apparently paid "spot sales" prices for oil, and it may have bought in somewhat lower volumes. The Robinson-Patman Act does not prohibit volume-related price differences that reflect genuine cost differences. See 15 U.S.C. § 13(a); FTC v. Morton Salt Co., 334 U.S. 37, 48, 68 S.Ct. 822, 829, 92 L.Ed. 1196 (1948); Frederick M. Rowe, Price Discrimination Under the Robinson-Patman Act, ch. 10 at 265-321 (1962). Nor does it prohibit price differences between spot sales and long-term contract sales that reflect different market conditions. See Texas Gulf Sulphur Co. v. J.R. Simplot Co., 418 F.2d 793, 806-08 (9th Cir.1969); Rowe, supra, § 4.2 at 50, ch. 11 at 322-29.

It may well be that, at trial, Coastal would produce more specific price information, CAPECO would fail to demonstrate "cost justification," and, the potential cost, or market, related differences between "spot" and "contract" sales would evaporate. But, the opposite may also prove true. At this stage, a court could reasonably want to see more evidence--insisting that the plaintiff make a somewhat stronger, more specific, showing of a likely violation of law, including a probability of overcoming what the evidence now shows as plausible defenses--before finding a likelihood of success on the merits. See, e.g., Atari Games Corp. v. Nintendo of America, Inc., 975 F.2d 832, 837 (Fed.Cir.1992) (plaintiff must show "likelihood that it will overcome ... defense"); New England Braiding Co. v. A.W. Chesterton Co., 970 F.2d 878, 882-83 (Fed.Cir.1992) (same). But cf. Dallas Cowboys Cheerleaders, Inc. v. Scoreboard Posters, Inc., 600 F.2d 1184, 1188 (5th Cir.1979).

For another thing, the district court did not err in finding that Coastal would not suffer "irreparable harm" that a later damage award could not avoid. On the one hand, Coastal presented two witnesses who testified to such harm. These Coastal executives said, for example, that:

(1) "[F]uel from CAPECO is the only practical way to purchase fuel in the harbor."

(2) "[I]t's absolutely imperative that you have the supply from CAPECO refinery it's the only locally produced product from San Juan harbor, and without that access on equal basis to that supply you cannot compete in San Juan harbor."

(3) "[W]e are sustaining losses in here, ... I feel it's damaging our trade mark, and our brand and our reputation, and I don't think we can continue doing business like this."

(4) Withdrawal from San Juan Harbor "would serve irreparable damage upon Coastal's name which goes back to 1915 in the form of serving [marine] ... fuel in 20 other ports that we supply...."

On the other hand, cross-examination revealed that Coastal is a subsidiary of a large firm (of the same name) that sells marine fuel in 20 other ports; that, on at least three occasions, Coastal has imported marine fuel to San Juan (for resale) from its parent company's refinery in Aruba; that CAPECO stored at least some of this imported fuel oil for Coastal in CAPECO's San Juan facilities; that Coastal also, on at least one occasion, purchased fuel oil from Sun Oil, apparently in Puerto Rico; and that...