Burkhead v. Phillips Petroleum Company

• Citation: 308 F. Supp. 120
• Decision Date: 05 January 1970
• Docket Number: No. 51531.,51531.
• Parties: J. D. BURKHEAD, Plaintiff, v. PHILLIPS PETROLEUM COMPANY, Defendant.
• Court: U.S. District Court — Northern District of California

308 F. Supp. 120

J. D. BURKHEAD, Plaintiff, v. PHILLIPS PETROLEUM COMPANY, Defendant.

No. 51531.

United States District Court N. D. California.

January 5, 1970.

COPYRIGHT MATERIAL OMITTED

Maxwell Keith, San Francisco, Cal., for plaintiff.

C. Rex Boyd, C. Robert Carr, and Theodore A. Robinson, Los Angeles, Cal., for defendant.

ORDER AND OPINION

GERALD S. LEVIN, District Judge.

This is an antitrust case brought under provisions of the Sherman Act (15 U.S.C.A. §§ 15, 26) and the Clayton Act (15 U.S.C.A. § 15). Plaintiff is an individual, and has been the lessee and operator of a service station since approximately 1959. Until July 14, 1966, said service station was controlled by Tidewater Oil Company "Tidewater". Thereafter, as a result of defendant Phillips Petroleum Company's "Phillips" acquisition of certain of Tidewater's assets in 1966, plaintiff's service station has been controlled and leased by Phillips. Phillips deals in petroleum and other automotive products. It also acquires possessory interests in service stations and leases them to others.

For a first cause of action, plaintiff alleges that Phillips has violated the Sherman Act §§ 1, 2 (15 U.S.C.A. §§ 1, 2) and the Clayton Act § 3 (15 U.S.C.A. § 14) by its form of leases and contracts and by the imposition of oral exclusive dealing agreements regarding petroleum products and other products such as automotive accessories, tires, batteries and trading stamps.

Plaintiff also alleges that Phillips exercises control over the prices at which service stations operating under leases from Phillips can resell gasoline to the public.

For a second cause of action, plaintiff alleges that Phillips' 1966 acquisition of Tidewater's assets was unlawful as a violation of Clayton Act § 7 (15 U.S.C.A. § 18, cited infra). Plaintiff alleges further that subsequent to this acquisition, Phillips has engaged in conduct proscribed by a consent decree entered in United States v. Standard Oil of California et al., No. 1158-C (S.D.Cal.1959) by only leasing service stations for periods of one rather than three years. Plaintiff prays that this court remedy the situation by requiring Phillips to sell at public auction the assets acquired from Tidewater.

Phillips has filed a motion to dismiss on the grounds that (1) each cause of action fails to state a claim against defendant upon which relief can be granted; (2) the plaintiff lacks standing to sue as to the second cause of action; and (3) the complaint fails to state a claim upon which relief can be granted as to all allegations concerning defendant's alleged failure to comply with the consent decree entered in the Standard Oil case, supra.

Phillips' motion to dismiss is granted in part, denied in part, and modified in part, for the reasons discussed hereafter.

Plaintiff's First Cause of Action

1. Plaintiff's first cause of action is replete with general allegations concerning the leasing and sales practices of Phillips to which it objects and describing the injuries suffered by independent service station operators as a result of being forced to deal with Phillips. (Complaint, paragraphs IV-6, V, VI-15.) Plaintiff then goes on to describe how these practices affect and injure the plaintiff personally. (Complaint, paragraphs VII-16, VII-19.)

As to the first-stated general allegations, we find insufficient bases on which to state a claim for relief under the antitrust laws and dismiss such allegations.

To prevail in a private action under the antitrust laws, a private litigant must allege and prove a violation of the laws and damage to the litigant proximately resulting from the acts and conduct which constitute the violation. Simpson v. Union Oil Company, 311 F. 2d 764, 767 (9th Cir. 1963) rev'd on other grounds, 377 U.S. 13, 84 S.Ct. 1051, 12 L.Ed.2d 98 (1964); Myers v. Shell Oil Co., 96 F.Supp. 670, 674 (S.D.Cal. 1951) and cases cited therein.¹

Without deciding whether the plaintiff's allegations are sufficient to show a violation of the antitrust laws, it is clear that they are patently insufficient to show how or in what manner the violations complained of injured this plaintiff.

Although the plaintiff has alleged that the purported violations have injured other service station operators, it is well settled that the private litigant has no standing to redress a "public" wrong as opposed to a "private" wrong peculiar to and suffered personally by the litigant. Private litigants are not empowered to bring suit on behalf of the public in order to secure injunctive relief against allegedly unlawful practices harming the public interest as a whole; only the United States Attorney General can bring such suits. Clayton Act § 16 (15 U.S.C.A. § 26); United States v. Borden Co., 347 U.S. 514, 518-519, 74 S.Ct. 703, 98 L.Ed. 903 (1954); Dollac Corporation v. Margon Corporation, 164 F.Supp. 41, 65 (N.J.1958) aff'd, 275 F.2d 202 (3d Cir. 1960). The result is the same whether the private litigant seeks relief in the form of an injunction or in the form of damages: suit may not be maintained by the private litigant merely because of violations of the antitrust laws which have resulted in injury to the public. See Revere Camera Co. v. Eastman Kodak Co., 81 F.Supp. 325, 330 (N.D.Ill.1948) citing Beegle v. Thomson, 138 F.2d 875, 881 (7th Cir. 1943) cert. den. Beegle v. Thompson, 322 U.S. 743, 64 S.Ct. 1143, 88 L.Ed. 1576 (1944).

Plaintiff has failed to show how the practices complained of, certainly public in nature, have caused special injury to it. Absent such a showing, those portions of the complaint are dismissed which merely allege the general effect produced by the practices of Phillips complained of.

2. The sole allegations in the plaintiff's first cause of action which connect harm suffered by plaintiff with the allegedly unlawful practices complained of are contained in paragraphs VII-16—VII-19 of the complaint. Paragraph VII-16 recites:

At all times herein defendant has required plaintiff to purchase his tires, batteries, automotive accessories from it, has required plaintiff to carry Blue Chip stamps at a cost of approximately one-half cent to the dealer for one gallon of gasoline, and has control of the retail prices of his gasolines. Subsidy assistance on Blue Chip stamp promotions was made dependent upon the retail prices plaintiff charged for gasolines.

This allegation and the other allegations concerning the effect of Phillips' practices on plaintiff are not paragons of good pleading, but neither are they so fatally defective as to require dismissal. The vice of these allegations is the failure of plaintiff to set out supporting facts showing how Phillips has control of the retail prices charged by plaintiff for gasoline and in what manner Phillips has exercised this control so as to violate the antitrust laws. Without such additional facts, the recitation concerning Phillips' control over retail gasoline prices is merely a conclusion of law and an improper pleading.

Therefore, as to the allegations concerning injuries special to the plaintiff (Complaint paragraphs VII-16—VII-19), Phillips' motion for dismissal will be treated as a motion for a more definite statement² to be complied with as indicated above.

Phillips cites an additional reason for its motion to dismiss as to paragraphs VII-16—VII-19 of the complaint, namely plaintiff's failure to show how the violations of the antitrust laws personal to plaintiff were made in or substantially affected interstate commerce. Without such a showing, no cause of action lies under the federal antitrust laws.

Phillips' contention in this regard relies primarily on Myers v. Shell Oil Co., supra 96 F.Supp. at 676. In Myers, the court found a failure to state a claim upon which relief could be granted because all of the petroleum products sold to the California plaintiff (such sales forming the subject of the action) had been produced (refined) in California. As a result the acts complained of as violating the antitrust laws could not be deemed to have occurred "in the course of commerce." The court thought it irrelevant that the source of the petroleum was from states or areas other than California.

Cases since Myers, however, follow an expanded view of what constitutes activities within the scope of interstate commerce for purposes of the antitrust laws. (Even the court in Myers found that an intrastate activity falls within the regulatory scope of the Sherman Act if it affects interstate commerce. Id. at 675.) Hence, even though a practice is conducted wholly intrastate, it may fall within the ban of the antitrust laws if it stems from, or contributes to any interstate commerce. In Moore v. Mead's Fine Bread Co., 348 U. S. 115, 119-120, 75 S.Ct. 148, 150-151, 99 L.Ed. 145 (1954) the Court found certain practices to have had a sufficient enough effect on interstate commerce to come within the protection of the antitrust laws:

"The victim, to be sure, is only a local merchant; and no interstate transactions are used to destroy him. But the beneficiary is an interstate business * * *.

* * * * * *

It is, we think, clear that Congress by the Clayton Act and Robinson-Patman Act barred the use of interstate business to destroy local business * * *.³

The acts complained of in the case before us occurred in the course of interstate commerce or affected same to the extent that the products to be purchased by the plaintiff allegedly came from out of state (or were "perfected" out of state, thus avoiding the holding in Myers in any event). Even if the products involved — gasoline, tires, batteries, Blue Chip stamps — were manufactured and delivered wholly intrastate in California, they certainly "affected" interstate commerce to a substantial degree. Thus the complaint is sufficient in this regard. See Burke v. Ford, 389 U.S. 320, 321, 88 S.Ct. 443, 19 L.Ed.2d 554 (1967); Moore, supra.⁴

Plaintiff's Second Cause of Action

Phillips' motion to dismiss the plaintiff...