Bass v. Gulf Oil Corporation

• Decision Date: 13 October 1969
• Docket Number: Civ. A. No. 2142.
• Parties: I. H. BASS, Mary Jo Bass High, F. V. High and Ray Bass, Plaintiffs, v. GULF OIL CORPORATION and Gulf Refining Company, Defendants.
• Court: U.S. District Court — Southern District of Mississippi

304 F. Supp. 1041

I. H. BASS, Mary Jo Bass High, F. V. High and Ray Bass, Plaintiffs, v. GULF OIL CORPORATION and Gulf Refining Company, Defendants.

Civ. A. No. 2142.

United States District Court S. D. Mississippi, Hattiesburg Division.

October 13, 1969.

Michael R. Eubanks, Lumberton, Miss., William A. McKenzie, McKenzie & Baer, Dallas, Tex., for plaintiffs.

James A. Boone, Charles C. Hairston, Earl T. Thomas, Charles R. Davis, Jackson, Miss., for defendants.

MEMORANDUM OPINION ON MOTIONS TO COMPEL OPPONENT TO ANSWER QUESTIONS AND FOR PRODUCTION, INSPECTION AND COPYING OF DOCUMENTS

NIXON, District Judge.

In their Complaint filed on November 30, 1966 against defendants, plaintiffs, the principal royalty owners of the defendant Gulf Oil Corporation's I. H. Bass, et al lease located in the Baxterville Field in Lamar County, Mississippi, charged that the defendants have combined and have conspired in controlling and monopolizing crude oil prices in the field in violation of the Anti Trust Laws of the United States and more particularly sections 1 and 2 of the Sherman Act (15 U.S.C. secs. 1 and 2), sec. 2(a), (f) of the Clayton Act as amended (15 U.S.C. sec. 13(a), (f)) and sec. 7 of the Clayton Act (15 U.S.C. sec. 18). More particularly, plaintiffs allege that the defendant Gulf Oil Corporation has, since at least June 1, 1963, fixed and maintained an arbitrary posted price of $2.00 per barrel for oil produced by it under the Bass Lease through an illegal and discriminatory agreement with its subsidiary, the defendant Gulf Refining Company and that this $2.00 per barrel price is at least $.25 cents per barrel less than the market value of the oil produced from June 1, 1963 to the date of this suit.

Plaintiffs have filed two motions, namely, a Motion to Compel J. G. Coates, an agent and employee of the defendant Gulf Oil Corporation to answer questions propounded to him on the taking of his oral deposition on August 14, 1969, which he refused to answer pursuant to the advice of counsel who objected thereto; and a Motion for Production, Inspection and Copying of the following documents, filed pursuant to Rule 34: (1) Lease operating statements for the Bass Lease for the years 1967, 1968 and 1969; (2) Domestic control reports for the Baxterville Field from 1960 to June 1969; and (3) data concerning allowables, well production history, up or down structure location, and any other financial data regarding the costs of drilling, maintaining and operating Bass Wells Nos. 3, 4 and 5, all of which the defendants refused to produce.

The motion filed by plaintiffs to compel the witness Coates to answer questions propounded to him upon the taking of his oral deposition on August 14, 1969 for the purpose of inquiring about the basis for, and manner of, setting the price payed for crude oil in the Baxterville Field was filed after the defendants objected to certain questions asked the witness with reference to a period of time subsequent to the filing of the complaint herein on the ground of irrelevancy and thus instructing the witness not to answer.

The motion for production pursuant to Rule 34 of the Federal Rules of Civil Procedure was filed herein by plaintiffs following objections by the defendants to the production of the foregoing documents requested by plaintiffs during the taking of the oral deposition of J. L. Coulson, an employee of the defendant, Gulf Oil Corporation. Defendants objected to the production on two grounds: (a) that they relate to a period of time subsequent to November 30, 1966, the date plaintiffs' complaint was filed, and thus are irrelevant to this suit; and (b) cost data for the Baxterville Field is likewise irrelevant to plaintiffs' cause of action. Furthermore, defendants also contend that plaintiffs have not affirmatively established the "good cause" required by Rule 34 as a prerequisite to the production of these documents.

The defendants objected to the questions asked during the taking of the deposition of J. G. Coates and to the production of the documents requested during the taking of the deposition of J. L. Coulson on the ground of irrelevancy for the reason that the information requested covered a period of time subsequent to the date of the filing of the complaint herein. This is the sole basis for the "Rule 26 objection" and one of the bases of the "Rule 34 objection."

Rules 26 and 34 of the Federal Rules of Civil Procedure, pursuant to which the foregoing Motions were filed, require, respectively, that answers be given and documents furnished, provided they are not privileged and are relevant to the subject matter involved in the pending action. Rule 26 specifically states that it is not ground for objection that the testimony will be inadmissible at the trial if the testimony reasonably appears calculated to lead to the discovery of admissible evidence, and Rule 34 by reference embodies the same principle. Since there is no claim of privilege, the only question before the Court in connection with the motion filed pursuant to Rule 26, and one of the questions presented by the motion filed pursuant to Rule 34 is whether the information desired through the requested answers and production is relevant to the subject matter involved in the pending action, regardless of its admissibility at the trial, provided it appears reasonably calculated to lead to the discovery of admissible evidence. Specifically, the question presented is whether in this particular case information concerning changes in the price paid by Gulf for crude oil obtained by the defendants from the Baxterville Field subsequent to the date of the filing of the complaint herein, and more specifically for the years 1967, 1968 and 1969, is relevant to the subject matter involved in the pending action and reasonably appears calculated to lead to the discovery of admissible evidence, regardless of its admissibility at the trial of this case in its present posture.

Initially, the Court notes that plaintiffs allege that the defendants have heretofore fixed the price of Baxterville crude and continued to control approximately 90% of the crude produced and sold in the Field, including its transportation. Furthermore, it is alleged that Gulf Oil continues to control plaintiffs' Baxterville royalty crude to the extent that Gulf fixes the price thereon now as it has heretofore done since prior to the construction of Gulf's Black Creek Refinery which was built for the purpose of processing Baxterville crude. Plaintiffs, through affidavits attached to their motions, seek an explanation for developments occurring after the date of the original complaint and contend that the price paid for Baxterville crude by defendant Gulf Oil Corporation is not determined by competitive forces of the market place but solely within the discretion and at the whim of Gulf. Plaintiffs base their foregoing contentions on the following: the price posted for Baxterville crude by defendant Gulf Oil continued unchanged for approximately ten years, that is, from January 30, 1957 to December 1, 1966 at $2.00 per barrel; on December 1, 1966, the day following the filing of the complaint herein, the defendant Gulf Oil raised its posted price from $2.00 to $2.25 per barrel; on February 1, 1968 Gulf raised its posted price another five cents per barrel, the last announced retroactive increase having been announced on March 7, 1968, which plaintiffs contend, could not have been dictated solely by a desire to assure a steady supply of crude inasmuch as the five cents per barrel paid on crude purchased between February 1 and March 7, 1968 could not possibly affect the amount of supply; Mr. Coates' assistant J. W. Streit, in his deposition taken on July 11, 1969 suggested or intimated that the five cent per barrel increase effective February 1, 1968 was based on or otherwise related to a decrease in the pipeline tariff charged by defendant Gulf Refining Company in the amount of five cents per barrel effective January 1, 1968; on March 1, 1969 defendant Gulf raised its posted price for Baxterville crude an additional fourteen cents per barrel, and thus, between the date that the original complaint was filed herein and the present date there has been a total increase in the price of crude of $.44, or 22% over the $2.00 per barrel maintained for approximately ten years prior thereto. Thus, plaintiffs allege that the above increases in the price paid for Baxterville crude not only provide a basis for possibly amending their original complaint, but also are probative of the existence and power of the alleged conspiracy between defendants to fix and maintain, in defendants' absolute discretion, the price of Baxterville crude without regard to market or any other competitive forces, and thus these changes are relevant to the subject matter of this suit.

There apparently is a split of authority as to whether events transpiring subsequent to the filing of a suit are relevant and thus the subject of inquiry under the discovery rules, particularly in the absence of an amended or supplemental pleading bringing into direct issue the period of time subsequent to the date of filing of the original suit. A number of Courts have held that inquiry may not be made regarding events occurring subsequent to the commencement of the action. Several of these cases deal with the question of relevancy as it relates to interrogatories propounded under Rule 33, Federal Rules of Civil Procedure. McInerney v. Wm. P. McDonald Construction Co., 28 F.Supp. 557 (E.D.N.Y.1939); Massachusetts Bonding and Ins. Co. v. Harrisburg Trust Co., 2 F.R.D. 197 (M.D.Pa.1941); Cinema Amusements, Inc. v. Loew's, Inc., et al., 7 F.R.D. 318 (D.Del.1947); Stanzler v. Loews Theater and Realty Corp., 19 F.R.D. 286 (D.R.I.1955); Singer Mfg. Co. v. Brother Intern. Corp., 191 F.Supp. 322 (S.D.N.Y.1960). Other Courts have sustained objections made during oral depositions to questions relating to activities...