Apex Oil Co. v. DiMauro

Decision Date17 April 1989
Docket NumberNo. 82 Civ. 1796 (JMW).,82 Civ. 1796 (JMW).
Citation713 F. Supp. 587
PartiesAPEX OIL COMPANY, Plaintiff, v. Joseph DiMAURO, et al., Defendants.
CourtU.S. District Court — Southern District of New York

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Cadwalader, Wickersham & Taft, New York City, for plaintiff; Richard J. Wiener, Pamela R. Chepiga, Jeffrey Q. Smith, of counsel.

Pollack & Kaminsky, New York City, for defendants Joseph DiMauro, Triad Petroleum, Inc. and TIC Commodities, Inc.; Martin I. Kaminsky, Edward T. McDermott, of counsel.

Shea & Gould, New York City, for defendants Coastal Corp. Coastal States Market, Inc., Belcher Oil Co., Belcher Co. of New England, Inc., counterclaim plaintiff and counterclaim defendant Belcher New Jersey, Inc.; Michael Lesch, Adam Gilbert, Karen S. Frieman, Yee Wah Chin, of counsel.

Cahill, Gordon & Reindel, New York City, for defendant New York Mercantile Exchange; William Hegarty, Peter Leight, Kathy Silberthau, of counsel.

Nutter, McClennen & Fish, Boston, Mass., for defendants Northeast Petroleum Industries, Inc. and Northeast Petroleum Corp.; Neil Motenko, T. Christopher Donnelly, Lisa Wood, of counsel.

Katten, Muchin, Zavis, Pearl & Galler, Chicago, Ill., for defendants Stinnes Corp. and Stinnes Interoil, Inc.; Donald E. Egan, Lee Ann Watson, David K. Schmidt, of counsel.

Brenner, Saltzman, Wallman & Goldman, New Haven, Conn., for defendant George E. Warren Corp.; C. David Goldman, David Schaefer, James C. Graham, Marc R. Cohen, of counsel.

Kaye, Scholer, Fierman, Hays & Handler, New York City, for defendant Julian Raber; Julius Berman, Phillip A. Geraci, of counsel.

Stein, Bliablias, McGuire & Pantages, Livingston, N.J., for defendant Eastern Oil of New Jersey; Kenneth McGuire, of counsel.

OPINION

WALKER, District Judge:

                                     INDEX TO THE OPINION
                  I. PROCEDURAL HISTORY .............................................. 591
                 II. FACTS ........................................................... 592
                III. BELCHER'S MOTION FOR SUMMARY JUDGMENT
                     A. Introduction ................................................. 593
                     B. Standard for Summary Judgment ................................ 594
                     C. Claims under § 1 of the Sherman Act .......................... 594
                        1. Count One ................................................. 596
                        2. Counts Two and Three ...................................... 597
                     D. Claim under § 2 of the Sherman Act (count four) .............. 599
                     E. Claim under the Commodities Exchange Act (Count 5) ........... 601
                     F. Conclusion as to Belcher's Summary Judgment Motion ........... 603
                 IV. APEX'S MOTION TO STRIKE BELCHER'S AFFIRMATIVE DEFENSES .......... 603
                  V. APEX'S MOTION TO DISMISS BELCHER'S COUNTERCLAIMS
                     A. Introduction ................................................. 605
                     B. Inequitable behavior and violation of the CEA ................ 606
                     C. Common law fraud ............................................. 607
                     D. Martin Act violation ......................................... 607
                     E. Monopolization ............................................... 608
                 VI. APEX'S AND THE EXCHANGE'S CROSS-MOTIONS FOR SUMMARY
                      JUDGMENT ON THE EXCHANGE'S COUNTERCLAIMS
                     A. Common Law Misrepresentation ................................. 608
                     B. Attorney's Fees .............................................. 610
                VII. SUMMARY OF CONCLUSIONS .......................................... 611
                

I. PROCEDURAL HISTORY

On August 8, 1986, this Court, in an opinion reported at 641 F.Supp. 1246, dismissed the complaint in all respects as to all defendants because, inter alia, the Court concluded that plaintiff Apex Oil Company ("Apex") had failed to submit sufficient evidence supporting its allegations of conspiracy among eighteen defendants. On appeal, the Second Circuit affirmed in part and reversed in part. 822 F.2d 246 (2d Cir.1987). Specifically, the Second Circuit affirmed all of this Court's holdings except for its conclusion that there was no material factual dispute concerning the existence of a conspiracy among three of the defendants. On that score, the Court of Appeals held that there existed an issue of fact as to whether Belcher1 had conspired with Northeast Petroleum Corporation and Northeast Petroleum Industries, Inc. (collectively, "Northeast") and Global Petroleum Corporation ("Global").2

Contrary to the assertions of Apex, the Court of Appeals did not address either the purpose or the effect of any such conspiracy. Defendants' motions to this Court had not been directed to such questions as whether per se or Rule of Reason liability was involved in the Sherman Act § 1 claims or whether there was evidence of a specific intent to monopolize in the Sherman Act § 2 claims; defendants solely challenged the existence of any common understanding. Thus, the Court of Appeals' opinion narrowly focused on "whether there is an issue of fact as to the existence of a conspiracy." 822 F.2d at 252. Further, although Apex alleged numerous conspiracy objectives in the amended complaint, the Second Circuit did not examine each independently. Rather, once the Court of Appeals concluded that there was a genuine issue of material fact regarding the existence of a conspiracy between Belcher, Northeast and Global, it reversed this Court's opinion as to all the conspiracy claims as to these three defendants. Before the Second Circuit issued its opinion, Apex settled its claims against Global and Northeast. Belcher, who is the only remaining defendant in this action, now moves pursuant to Fed.R.Civ.P. 56 for summary judgment dismissing the reinstated claims on the grounds that, even assuming the existence of a common undertaking, there is no genuine material issue of fact that its purposes were unlawful or that any anticompetitive effects resulted from any common actions.

Apex cross-moves both for summary judgment on the counterclaims asserted by Belcher and to strike all of Belcher's affirmative defenses. Apex and the New York Mercantile Exchange (the "Exchange"), formerly a defendant in this action, cross-move for summary judgment on the Exchange's counterclaims against Apex.

II. FACTS

The facts underlying this action and the intricacies of the commodities futures market have been discussed in considerable detail in both the opinion of the Court of Appeals and this Court. Here the Court limits itself to a brief recitation of the facts concerning the pending motions.

In early 1982, the parties to this action were players in the commodities futures market for No. 2 heating oil. In an options market, one takes either a "long" or "short" position with respect to the contract being sold, the longs agreeing to purchase and the shorts agreeing to sell a specified quantity of the subject matter of the contract at a negotiated price and at a definite date in the future. In this case, each short contract for No. 2 heating oil represented a promise to deliver 1000 barrels or 42,000 gallons of oil in New York harbor.

Except for the price of the oil, all aspects of an oil futures contract are subject to uniform terms established by the Exchange. In most cases, the contracts are not satisfied by actual delivery of the oil; rather, the contract is liquidated when the long or the short sells or buys an equal number of short or long positions before the close of trading in that contract, here January 29, 1982. This case, however, concerns unliquidated oil contracts for which delivery was required.

Once trading in futures contracts for a given month closes, the Exchange steps in to coordinate delivery of the oil by the outstanding shorts to the remaining longs by matching each long and short contract. However, there are methods by which actual delivery may still be avoided, including a "book transfer," whereby the delivery obligation is extinguished by transfer of ownership of the oil without a physical transfer of the product. On an agreement to "exchange futures for product" ("EFP") by whereby a new contract to deliver oil on the wet market is substituted for the delivery obligation. Unless one of three options is chosen, actual delivery must occur to satisfy the short's contractual obligation. Otherwise, Exchange rules provide for substantial default penalties.

After trading in February 1982 oil contracts closed on January 29, 1982, Apex held the short position on 4,378 out of 4,906 outstanding contracts. Northeast held 748 long contracts, Global held 362 contracts, and Belcher held 315 contracts.

As required by Exchange rules, Apex selected delivery locations on February 1. Although Apex was entitled by Exchange rules to designate several locations for delivery and to allocate the contracts to those locations as it saw fit, it elected instead to satisfy almost all contracts through delivery at the GATX terminal in Carteret, New Jersey. The Exchange then designated Apex to satisfy the contracts held by Global, Northeast, and Belcher, as well as other entities dismissed from the case. To facilitate delivery, each long was required by Exchange rules to nominate a delivery date and method by 4:30 p.m. on February 5.

The Exchange rules governing the nominating process grant a long complete discretion to demand the date and method of delivery it desires. As noted, if the matched short is unable to satisfy the long's demands, the long may recover substantial default penalties. Nevertheless, longs are typically flexible in dealing with their matched short and the short is frequently excused from its obligation to deliver by a particular method on a particular date in favor of a mutually-agreed alternative. In addition, a long will often spread out nominations over the delivery period depending on its need for oil balanced against the cost of storage.

The disputes in this case largely are based upon the way the long defendants nominated the February 1982 oil contracts for delivery. Apex alleges that the long defendants conspired...

To continue reading

Request your trial
20 cases
  • Maltz v. Union Carbide Chemicals & Plastics Co.
    • United States
    • U.S. District Court — Southern District of New York
    • January 20, 1998
    ...(citing Gorrill v. Icelandair/Flugleidir, 761 F.2d 847, 853 (2d Cir. 1985)) (applying New York law); accord Apex Oil Co. v. DiMauro, 713 F.Supp. 587, 611 (S.D.N.Y.1989) (control must be established only as to the transaction attacked so that, as to that transaction, the entity had no separa......
  • Granite Partners, L.P. v. Bear, Stearns & Co. Inc.
    • United States
    • U.S. District Court — Southern District of New York
    • August 25, 1998
    ...restraints of trade. Such characterization, however, is reserved for `manifestly anticompetitive' practices." Apex Oil Co. v. DiMauro, 713 F.Supp. 587, 595 (S.D.N.Y. 1989) (citing Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 50, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977)). Only a na......
  • In re Sahlen & Associates, Inc. Securities Lit.
    • United States
    • U.S. District Court — Southern District of Florida
    • July 10, 1991
    ...General Business Law. The law is clear that there is no private cause of action under the New York provision. Apex Oil Co. v. DiMauro, 713 F.Supp. 587, 607-08 (S.D.N.Y.1989); Feinman v. Schulman Berlin & Davis, 677 F.Supp. 168, 173 (S.D.N.Y.1988); CPC Intern., Inc. v. McKesson Corp., 70 N.Y......
  • Geneva Pharmaceuticals Tech. v. Barr Laboratories
    • United States
    • U.S. District Court — Southern District of New York
    • May 10, 2002
    ...intent existed. Hudson Valley Asbestos Corp. v. Tougher Heating & Plumbing Co., 510 F.2d 1140 (2d Cir.1975); Apex Oil Co. v. DiMauro, 713 F.Supp. 587, 600 (S.D.N.Y.1989) (granting summary judgment on conspiracy to monopolize claim where "the alleged activities of the ... defendants, both in......
  • Request a trial to view additional results
5 books & journal articles
  • DISAPPROVAL OF QUICK-LOOK APPROVAL: ANTITRUST AFTER NCAA v. ALSTON.
    • United States
    • Washington University Law Review Vol. 100 No. 1, September 2022
    • September 1, 2022
    ...(10th Cir. 2017). (90.) Id. at 1311 (citing Cal. Dental Ass'n v. FTC, 526 U.S. 756, 769-70 (1999)). (91.) See Apex Oil Co. v. DiMauro, 713 F. Supp. 587, 596 (S.D.N.Y. 1989) ("The primary distinction between the Rule of Reason and the per se approach is that no showing of anticompetitive eff......
  • THE FACTOR/ELEMENT DISTINCTION IN ANTITRUST LITIGATION.
    • United States
    • William and Mary Law Review Vol. 64 No. 3, February 2023
    • February 1, 2023
    ...at 1209-10. (6.) Verizon Commc'ns Inc. v. Law Offs. of Curtis V. Trinko, LLP, 540 U.S. 398, 408 (2004). (7.) Apex Oil Co. v. DiMauro, 713 F. Supp. 587, 596 (S.D.N.Y. 1989) ('The primary distinction between the Rule of Reason and the per se approach is that no showing of anticompetitive effe......
  • Monopolization and Related Offenses
    • United States
    • ABA Antitrust Library Antitrust Law Developments (Ninth Edition) - Volume I
    • February 2, 2022
    ...& n.4 (finding that short-run control over price of first mall in area did not constitute monopoly power); Apex Oil Co. v. DiMauro, 713 F. Supp. 587, 600-01 (S.D.N.Y. 1989) (finding that power over price for a few days is insufficient). 11. Verizon Commc’ns v. Law Offices of Curtis V. Trink......
  • Table of Cases
    • United States
    • ABA Antitrust Library Antitrust Law Developments (Ninth Edition) - Volume II
    • February 2, 2022
    ...Co., 238 F.2d 867 (7th Cir. 1956), 1206, 1242 Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940), 1, 62, 86, 1642 Apex Oil Co. v. DiMauro, 713 F. Supp. 587 (S.D.N.Y. 1989), 7, 9, 13, 16, 224, 879 Apotex, Inc. v. Cephalon, Inc., 2014 U.S. Dist. LEXIS 131453 (E.D. Pa. 2014), 227 Apotex Corp.; Un......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT