Bathke v. Casey's General Stores, Inc.

• Decision Date: 11 August 1995
• Docket Number: No. 94-3776,94-3776
• Citation: 64 F.3d 340
• Parties: 1995-2 Trade Cases P 71,085 Gilbert BATHKE; Valoris Bathke; Ronald Condon; Lanina Condon; Panora Oil Company; Martin Kress; Annette Kress; Anne Lubeck; Petroleum Marketers of Iowa, Plaintiffs-Appellants, v. CASEY'S GENERAL STORES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 340

64 F.3d 340

1995-2 Trade Cases P 71,085

Gilbert BATHKE; Valoris Bathke; Ronald Condon; Lanina

Condon; Panora Oil Company; Martin Kress;

Annette Kress; Anne Lubeck; Petroleum

Marketers of Iowa, Plaintiffs-Appellants, v. CASEY'S GENERAL STORES, INC., Defendant-Appellee.

No. 94-3776.

United States Court of Appeals,

Eighth Circuit.

Submitted May 15, 1995.

Decided Aug. 11, 1995.

Barry J. Nadler and James A. Brewer, Ames, IA, for appellant.

Edward W. Remsburg and H. Richard Smith, Des Moines, IA, for appellee.

Before McMILLIAN, BEAM, and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

The plaintiffs, gasoline retailers located in small towns, appeal the district court's ¹ order granting summary judgment to the defendant, Casey's General Stores, Inc., a multi-state retailer of gasoline and other goods, on the plaintiffs' complaint alleging that Casey's had sold gasoline at below-cost prices to destroy or control competition in violation of federal and state antitrust laws. The district court held that the plaintiffs failed to produce sufficient evidence to create a jury question on three required elements of their unfair pricing claims: the relevant geographic market, that Casey's was selling gas below cost, and that Casey's had either a reasonable prospect or a dangerous probability of recouping its investment in the alleged below-cost prices. We affirm.

I.

There are no significant factual disputes on the questions presented for our review. The only dispute concerns the legal sufficiency of the plaintiffs' evidence to raise a jury question.

The named plaintiffs and the nearly 175 class members they represent (hereinafter "plaintiffs") owned or operated gasoline stations in small Iowa towns in 1988. The plaintiffs' stores were located in 67 Iowa towns where Casey's had convenience stores that sold gasoline. Each of the 67 towns has a population of fewer than 5500 persons.

Casey's is a multi-state retailer of gasoline and other merchandise, and operates over 800 convenience stores in Iowa, Missouri, Illinois, Minnesota, Nebraska, Kansas, Wisconsin, and South Dakota. Casey's owns approximately 600 of the stores and the remainder are owned by franchisees. It owns all of the stores in the 67 Iowa towns involved in this case.

During the 1980's some of Casey's competitors for gasoline business began converting their gasoline stations to convenience stores and generally upgrading their facilities. These competitors began to gain a larger percentage of the gasoline market at Casey's expense. From 1984 through early 1988, Casey's gasoline sales for its company stores dropped from 450,000 gallons per year to nearly 365,000 gallons per year per store.

Casey's internal company documents indicate that sometime during 1987, Casey's decided to take action to restore the lost volume of gasoline sales in certain towns. Casey's directed company-owned stores where volume had fallen below thirty thousand gallons per month to reduce the price of gas until the store restored the thirty thousand gallon volume. Casey's directed stores losing sales to competition to reduce gas prices to regain the volume. Casey's instructed stores selling at least thirty thousand gallons monthly simply to price competitively. These pricing directives did not target towns or markets of any particular population or geographic size. Casey's gave a different set of instructions to stores that faced new competitors or unusual competitive situations. Casey's goal was to achieve gasoline sales of thirty thousand gallons per month in each store.

On December 4, 1990, the plaintiffs filed this three-count anti-competition lawsuit against Casey's. Count I alleged that Casey's engaged in discriminatory pricing practices in violation of section 2(a) of the Robinson-Patman Act, 15 U.S.C. Sec. 13(a). Count II alleged that Casey's engaged in predatory pricing in violation of section 2 of the Sherman Act, 15 U.S.C. Sec. 2. Count III alleged violation of the Iowa unfair discrimination statute, Iowa Code ch. 551 (1989). The district court certified this case as a class action in 1993.

The plaintiffs' theory underlying all three of its claims in this case is that Casey's developed and implemented a plan to target and destroy, or to tame, rival gasoline sellers in small Iowa towns by pricing its gasoline below cost for a period of time. The plaintiffs contend that in towns where rivals were destroyed, Casey's then would recoup its losses on the below cost gasoline sales by charging monopoly prices far above normal competitive market prices. The plaintiffs contend that in towns where the rivals were tamed, oligopolistic pricing of gasoline resulted because the rivals realized their peril and tacitly accepted charging their customers excessive gasoline prices.

Casey's first moved for summary judgment before the parties had completed discovery. The district court denied Casey's motion. After the parties completed extensive discovery, Casey's again moved for summary judgment. Casey's also filed a motion to dismiss some class members who had not complied with discovery orders or, alternatively, to decertify the class.

On August 23, 1994, the district court held an all day hearing on the motions. The district court eventually denied Casey's motion to decertify the class, but dismissed with prejudice the claims of class members who had not complied with discovery requests. The district court held two additional hearings on the motion for summary judgment, on September 8, 1994, and October 11, 1994, each hearing lasting about two hours. On October 14, 1994, the district court granted Casey's motion for summary judgment.

In entering summary judgment, the district court held that the plaintiffs failed to present sufficient evidence to create a jury question on three essential requirements of their unfair pricing scheme claims under both the Sherman Act and the Robinson-Patman Act. The district court ruled that the plaintiffs produced insufficient facts: (1) to establish the relevant geographic market, (2) to establish that Casey's sold the gasoline below its cost, or (3) to establish that Casey's would be able to recoup its losses and actually profit from this alleged illegal pricing scheme. Accordingly, the district court entered judgment in favor of Casey's on the plaintiffs' two federal claims, and dismissed without prejudice the Iowa state law unfair discrimination claim. The district court also assessed against the plaintiffs Casey's costs of taking certain depositions. The plaintiffs appeal both the decision granting summary judgment and the decision assessing costs.

II.

" 'In complex antitrust cases, no different or heightened standard for the grant of summary judgment applies.' " Flegel v. Christian Hosp., Northeast-Northwest, 4 F.3d 682, 685 (8th Cir.1993) (quoting Amerinet, Inc. v. Xerox Corp., 972 F.2d 1483, 1489-90 (8th Cir.1992)), cert. denied, --- U.S. ----, 113 S.Ct. 1048, 122 L.Ed.2d 356 (1993). We review de novo the district court's decision granting summary judgment. Willman v. Heartland Hosp. East, 34 F.3d 605, 609 (8th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1361, 131 L.Ed.2d 218 (1995). We must review the record in the light most favorable to the non-moving party and determine whether the movant demonstrated that there are no genuine issues of material fact for trial and that it is entitled to judgment as a matter of law. See id. at 609-610.

We note at the outset that the Supreme Court has urged great caution and a skeptical eye when dealing with unfair pricing claims. " '[P]redatory pricing schemes are rarely tried, and even more rarely successful,' Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 589, 106 S.Ct. 1348, 1357, 89 L.Ed.2d 538 (1986), and the costs of an erroneous finding of liability are high." Brooke Group, Ltd. v. Brown & Williamson Tobacco, --- U.S. ----, ----, 113 S.Ct. 2578, 2589, 125 L.Ed.2d 168 (1993).

"The mechanism by which a firm engages in predatory pricing--lowering prices--is the same mechanism by which a firm stimulates competition; because 'cutting prices is the very essence of competition ...[;] mistaken inferences ... are especially costly, because they chill the very conduct the antitrust laws are designed to protect.' " Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 122 n. 17 [107 S.Ct. 484, 495 n. 17, 93 L.Ed.2d 427] (1986) (quoting Matsushita, 475 U.S. at 594 ). It would be ironic indeed if the standards for predatory pricing liability were so low that antitrust suits themselves became a tool for keeping prices high.

Id. at ----, 113 S.Ct. at 2589-90. With these guidelines in mind, we turn to the merits of the issues presented for our review.

The plaintiffs allege that Casey's engaged in a pricing scheme that violated both section 2 of the Sherman Act, 15 U.S.C. Sec. 2, and section 2(a) of the Robinson-Patman Act, 15 U.S.C. Sec. 13(a). Section 2 of the Sherman Antitrust Act provides:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony....

15 U.S.C. Sec. 2. Although this section reads as a criminal statute, the antitrust laws provide a civil cause of action arising from a violation of this section. See 15 U.S.C. Sec. 15(a). By its language, section two of the Sherman Act is directed at controlling monopolies. Section two of the Sherman Act prohibits predatory pricing "when it poses 'a dangerous probability of actual monopolization.' " Brooke Group, --- U.S. at ----, 113 S.Ct. at 2587 (quoting Spectrum Sports, Inc. v. McQuillan, --- U.S. ----, ----, 113 S.Ct. 884, 890, 122 L.Ed.2d 247 (1993)). Predatory pricing means pricing a product below some objective measure of its cost. Matsushita, 475 U.S. at 585 n. 8, 106 S.Ct. at 1355 n. 8.

Section 2(a) of the...