Aladdin Oil Co. v. Texaco, Inc.
| Decision Date | 28 September 1979 |
| Docket Number | No. 77-2554,77-2554 |
| Citation | 603 F.2d 1107 |
| Parties | 1979-2 Trade Cases 62,890 ALADDIN OIL COMPANY, Plaintiff-Appellant, v. TEXACO, INC. and Poweram Oil Co., Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
David E. Cherry, Erwin A. Elias, Waco, Tex., for plaintiff-appellant.
Lyndon L. Olson, Waco, Tex., for Poweram Oil Co., Inc.
Cullen Smith, Waco, Tex., M. C. Bradford, Jr., Denver, Colo., Jack D. Childers, Houston, Tex., Lawrence R. Jerz, White Plains, N. Y., for Texaco, Inc.
Appeal from the United States District Court for the Western District of Texas.
Before RONEY, TJOFLAT and HILL, Circuit Judges.
This appeal from the grant of a summary judgment concerns the Colgate 1 doctrine of antitrust law. As we are convinced that plaintiff-appellant Aladdin Oil Company made an insufficient showing to withstand the motion for summary judgment of defendants-appellees Texaco, Inc. and Poweram Oil Company, Inc., we affirm.
This case involves the distribution of Texaco gasoline products in the Waco, McLennan County, Texas area. Plaintiff Aladdin Oil Company is one of a group of related corporations with basically common ownership engaged generally in distributing Mobil and Arco gasoline and other automotive products at the wholesale and retail levels in the Waco area. 2 Defendant Texaco, Inc. is a corporation engaged in the production of gasoline and automotive products on a nationwide basis which operates on the wholesale and retail levels in the Waco area. Texaco is the owner of approximately 12 retail gasoline stations in the Waco area in addition to its wholesale distribution operations. Defendant Poweram Oil Company is a corporation engaged in the distribution of Texaco gasoline and automotive products on the wholesale and retail levels in the Waco area.
The events which precipitated this litigation may be simply stated for our purposes.
Early in 1975, a long-time Texaco distributor in the Waco area, Service Oil Company, 3 decided to sell its assets and go out of the petroleum business. As a wholesale and retail distributor of competing products, Aladdin Oil pursued the opportunity to acquire a Texaco distributorship and entered into negotiations to purchase Service Oil. Aladdin Oil through a corporation which was to be formed to operate the distributorship, was able to reach an agreement with Service Oil for the sale of its business. The sale was subject to two contingencies. First, under the distributorship agreement between Texaco and Service Oil, any sale of the distributorship was subject to the express approval of Texaco, who the parties to this appeal agree could have (1) approved the sale; (2) disapproved the sale; (3) exercised its option to purchase the distributorship at the purchase price agreed on between Service Oil and Aladdin Oil; (4) assigned the purchase option. In addition to the contingency that Texaco approve the sale, the Aladdin Oil-Service Oil agreement provided that the sale was contingent upon Texaco's entering into a full one-year distributorship contract with Aladdin Oil. Soon after reaching this agreement to purchase Service Oil, Aladdin Oil contacted Texaco and requested that Texaco approve the sale and enter into a one-year distributorship agreement. The reactions of Texaco and Poweram Oil serve as the basis of this antitrust suit.
Texaco's local District Marketing Representative in Waco learned of the agreement of purchase between Aladdin Oil and Service Oil near the end of February 1975 when he obtained a copy of the agreement. Through him, representatives of Aladdin Oil arranged to meet with Texaco's District Sales Manager in an effort to obtain Texaco's agreement to waive its purchase option and to accept a new distributor in place of Service Oil. At the scheduled meeting, the Aladdin Oil representatives related the plans for the formation of a new corporation which would become the Texaco distributor.
Following this meeting, the Texaco District Sales Manager wrote to Texaco's Regional Manager in Houston, advising him of the proposed transaction and outlining the alternatives. He set out his various concerns about the proposal and, after outlining what he deemed were Texaco's alternatives, recommended that Texaco exercise its purchase option, collapse the distributorship, and absorb the Service Oil facilities into its own operations. The handling of the matter was referred to Texaco's Assistant Regional Manager who went to Waco in early March of 1975. He met with the same representatives of Aladdin Oil who had met with the Waco District Marketing Representative. The Assistant Regional Manager reacted negatively to the proposal and he was the first to suggest that Texaco consider assigning its rights under the purchase option to Poweram Oil. To this end, a meeting was arranged with the president of Poweram Oil. At that meeting, the two Texaco officials showed the president of Poweram Oil the Service Oil-Aladdin Oil agreement. They then asked him whether his company would be interested in purchasing Service Oil, if Texaco would assign its option to Poweram Oil. He replied affirmatively.
Upon his return to Houston, the Texaco Assistant Regional Manager briefed his direct supervisor, the Texaco Regional Manager, on developments. He opined that Texaco did not need two distributors in Waco for several reasons which need not concern us. He did not favor, however, the recommendation of the Texaco District Sales Manager that Texaco exercise its purchase option, collapse the distributorship, and absorb the Service Oil facilities into its own operations.
Eventually, the Texaco Regional Manager and the Texaco Assistant Regional Manager concluded that Texaco should assign its purchase option to Poweram Oil. Around the middle of March 1975, such a formal written recommendation was submitted to the New York headquarters of Texaco's Sales Department which detailed several reasons. During the first part of April 1975 the recommendation was approved by the New York office. Service Oil and Poweram Oil were both notified and the purchase option was formally assigned by Texaco to Poweram Oil. Thereafter, Poweram Oil exercised the option and purchased the various assets and properties of Service Oil. Alladin Oil then filed this suit.
Before the District Court, plaintiff alleged Inter alia 4 that the defendants had conspired to exclude Aladdin Oil to accomplish suppression of intrabrand competition and retail price maintenance. The District Court, after initially denying summary judgment, reversed course and upon reconsideration granted the summary judgment motions of the defendants.
As a starting point we briefly note the procedural posture in which we find this case: this is a summary judgment entered in an antitrust case.
The facile notion pressed upon us that antitrust cases are typically unsuited for summary procedures can be traced to Obiter dictum in Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). The five member majority expressed the following belief:
We believe that summary (judgment) procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised. Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of 'even handed justice.'
Id. at 473, 82 S.Ct. at 491 (footnote omitted). The four dissenters responded:
Further, the Rule (56) does not indicate that it is to be used any more 'sparingly' in antitrust litigation (Ante, (368 U.S.) p. 473 (82 S.Ct. 486, p. 491, 7 L.Ed.2d 458)) than in other kinds of litigation, or that its employment in antitrust cases is subject to more stringent criteria than in others. On the contrary, without reflecting in any way upon the good faith of this particular lawsuit, having regard for the special temptations that the statutory private antitrust remedy affords for the institution of vexatious litigation, and the inordinate amount of time that such cases sometimes demand of the trial courts, there is good reason for giving the summary judgment rule its full legitimate sweep in this field.
Id. at 478, 82 S.Ct. at 493 (Harlan, J., dissenting). Of course, on the face of Rule 56 the dissenters were inherently correct. There is nothing in Rule 56 itself or in the other Rules or in the Advisory Committee Notes to suggest that Rule 56 does not apply equally to all actions. See Federal Practice and Procedure PP 56.17(1), .17(5), Wright and Miller, Federal Practice and Procedure §§ 2730, 2732. That the Summary Judgment Rule applies to antitrust cases is readily evident from the Supreme Court's later treatment of First National Bank of Arizona v. Cities Service, 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) in which a writ of Certiorari was granted to determine whether the summary judgment entered was consistent with the standards announced in Poller. Id. at 259, 88 S.Ct. 1575. On receiving a record which took 11 years to create, the Supreme Court concluded that the defendant had properly supported its motion for summary judgment, and plaintiff, in effect, had merely rested on the allegations of conspiracy contained in the complaint. Over a dissent joined in by three justices, the majority explained that Rule 56 does indeed apply to antitrust suits:
(N)either precedent nor logic supports petitioner's contention that the evidence to which he points is significantly probative of conspiracy and, therefore, we hold that on the facts as shown summary judgment was correctly awarded to respondent.
To the extent that petitioner's burden-of-proof argument can be interpreted to suggest that Rule 56(e)...
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