Eastern Air Lines, Inc. v. Atlantic Richfield Co., 11-2

• Decision Date: 15 June 1983
• Docket Number: 11-3.,No. 11-2,11-2
• Citation: 712 F.2d 1402
• Parties: EASTERN AIR LINES, INC., Plaintiff-Appellant/Cross-Appellee, v. ATLANTIC RICHFIELD COMPANY, Defendant-Appellee/Cross-Appellant, Richard W. Dyke, dba Western Stations Co., Colvin Oil Company and F.O. Fletcher, Inc., dba Fletcher Oil Company, Amici Curiae, Ashland Oil Company of California, et al., Amici Curiae.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

712 F.2d 1402

EASTERN AIR LINES, INC., Plaintiff-Appellant/Cross-Appellee, v. ATLANTIC RICHFIELD COMPANY, Defendant-Appellee/Cross-Appellant Richard W. Dyke, dba Western Stations Co., Colvin Oil Company and F.O. Fletcher, Inc., dba Fletcher Oil Company, Amici Curiae Ashland Oil Company of California, et al., Amici Curiae.

Nos. 11-2, 11-3.

Temporary Emergency Court of Appeals.

Argued April 14, 1983.

Decided June 15, 1983.

As Corrected July 5, 1983.

Rehearing and Rehearing Denied July 18, 1983.

Certiorari Denied October 17, 1983.

COPYRIGHT MATERIAL OMITTED

James H. Bratton, Jr., Gambrell & Russell, Atlanta, Ga., with whom Donald L. Rickertsen and John G. Despriet, Atlanta, Ga., of the same firm and Laurence A. Schroeder, Walton, Lantaff, Schroeder & Carson, Miami, Fla., on brief for plaintiff-appellant/cross-appellee.

Robert E. Jordan, III, Steptoe & Johnson, Washington, D.C., with whom Richard H. Porter, F. Michael Kail, Samuel T. Perkins, Charles G. Cole, and Jeanne Davidson, Washington, D.C., of the same firm and John R. Lucas, Jr., Atlantic Richfield Co., Los Angeles, Cal., on brief for defendant-appellee/cross-appellant.

Neva T. Campbell, Schwabe, Williamson, Wyatt, Moore & Roberts, Portland, Or., on brief for Amici Curiae, Richard W. Dyke, dba Western Stations Co., Colvin Oil Co. and F.O. Fletcher, Inc., dba Fletcher Oil Co.

William H. Bode, Batzell, Nunn & Bode, Washington, D.C., with whom John E. Varnum and Tobey B. Marzouk, Washington, D.C., of the same firm on brief for Amici Curiae, Ashland Oil Co. of California, et al.

Before INGRAHAM, ESTES and BECKER, Judges.

Rehearing and Rehearing En Banc Denied July 18, 1983.

Certiorari Denied October 17, 1983. See 104 S.Ct. 278.

ESTES and WILLIAM H. BECKER, Judges:

Eastern Air Lines, Inc. ("Eastern") filed suit against Atlantic Richfield Company ("ARCO") on September 19, 1974, to recover amounts allegedly resulting from overcharges in the sale of jet fuel from ARCO to Eastern at O'Hare field in Chicago from November 1, 1973 to October 24, 1974, and Love Field in Dallas from November 1, 1973 to January 12, 1974. ARCO was required to supply Eastern during this time pursuant to the Middle Distillate Fuel Allocation Program, 38 Fed.Reg. 28660, enacted under the authority of the Economic Stabilization Act of 1970, 12 U.S.C. § 1904 note ("ESA") and the Emergency Petroleum Allocation Act of 1973, 15 U.S.C. § 754(a) ("EPAA"). Partial summary judgment was granted to Eastern on May 1, 1981, by United States District Judge Alcee Hastings. R. 1248.¹ A motion to vacate the summary judgment order was filed by ARCO on May 7, 1981 (R. 1294) but was not acted upon before Judge Hastings removed himself from the case on October 12, 1981.

On December 17, 1981, the case was transferred to Judge Jacob Mishler, United States Senior District Judge for the Eastern District of New York, sitting by designation. R. 1613. By Order dated December 28, 1981 (R. 2767), followed by a well-reasoned decision filed on January 12, 1982 (R. 1675), Judge Mishler granted ARCO's motion to vacate Judge Hasting's partial summary judgment order of May 1, 1981. On February 16, 1982, the case was heard by Judge Mishler. R.Vols. 13-20. By Memorandum of Decision and Order dated October 29, 1982 (filed November 2, 1982), Judge Mishler awarded Eastern $179,160 in damages against ARCO. R. 2597.² Final Judgment was entered on November 24, 1982. Eastern filed a Notice of Appeal with this court on November 29, 1982. R. 2772. ARCO cross-appealed on December 22, 1982.

The issues on appeal are:

1. Whether Judge Mishler properly vacated the May 1, 1981 partial summary judgment order entered by Judge Hastings.

2. Whether the District Court properly determined Eastern's class of purchaser and May 15, 1973 price.

3. Whether the District Court properly disallowed retroactive reallocation of costs by ARCO and properly computed damages resulting from the reallocation.

4. Whether ARCO violated the equal application rule by passing through too large a share of increased costs to Eastern.

5. Whether the District Court properly denied an award of attorney's fees, treble damages, and prejudgment interest.

Summary Judgment

Eastern contends that because Judge Hastings found that ARCO did not raise any questions of material fact³ before his partial summary judgment order was entered on May 1, 1981, the partial summary judgment may not be vacated by a successor judge except for the most "cogent reasons."⁴ Since Judge Hastings's May 1, 1981 order did not dispose of all the issues in the case,⁵ we find Judge Mishler's vacation of it squarely within the provisions of Federal Rule of Civil Procedure 54(b) which states in part:

When more than one claim for relief is presented in an action, . . . the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, . . . is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.

The partial summary judgment order entered by Judge Hastings on May 1, 1981 clearly provided for future revisions⁶ before becoming final and did not contain an express determination that there was no reason for delay or a direction for entry of final judgment provided in Rule 54(b). R. 01287. Therefore, Judge Mishler was fully justified in vacating the partial summary judgment order. This court need only evaluate whether Judge Mishler properly exercised his judgment and discretion "having in mind that one judge should not overrule another except for the most cogent reasons." United States v. Desert Gold Mining Company, 433 F.2d 713, 715 (9th Cir.1970).

We find that Judge Mishler took extraordinary care to explain his reasoned decision to vacate the partial summary judgment order. Memorandum of Decision, January 12, 1982, R. 01675-01717. Judge Mishler found that Judge Hastings had made certain erroneous factual findings and legal conclusions based thereon.⁷ While recognizing that the controlling regulations were susceptible to differing interpretations,⁸ Judge Mishler found Judge Hastings had erred in his interpretation. "A determination by a second judge that the former presiding judge made erroneous rulings that will seriously prejudice a party provides a cogent reason to justify vacating the prior order." Memorandum of Decision, January 12, 1982, R. at 01678. Judge Mishler's Memorandum of Decision sets forth with specificity both his reasons for believing the prior order was in error as well as his determinations that genuine issues of material fact then existed.

Class of Purchaser and May 15, 1973 Price

Eastern contests the District Court's finding that ARCO established a May 15, 1973 price of 12.89 cents per gallon and contends that ARCO actually set Eastern's price at 11.55 cents per gallon.⁹ The "maximum allowable price" at which products covered by the regulations could be sold was "the weighted average price at which the covered product was lawfully priced in transactions with the class of purchaser concerned on May 15, 1973, . . . plus (a) increased product costs and nonproduct costs incurred between the month of measurement and the month of May 1973. . . ." 10 C.F.R. § 212.82. A "class of purchaser" is defined as "purchasers or lessees to whom a person has charged a comparable price for comparable property or service pursuant to customary price differentials between those purchasers or lessees and other purchasers or lessees." 10 C.F.R. § 212.31. In assigning purchasers to their respective classes of purchaser, a refiner may consider several factors to determine whether or not the transactions were similar enough to be classified together, such as "volume, grade, quality, location or type of purchaser, or a term or condition of delivery." 10 C.F.R. § 212.31.

Mr. Richard Morse, an in-house attorney for ARCO, made the determination that Eastern should be assigned to a class of purchaser with the Aviation Division of U.S. Steel. Mr. Morse testified that he considered location, volume, and other factors in concluding that Eastern more closely resembled the Aviation Division of U.S. Steel than any other purchaser of jet fuel from ARCO, and thus Eastern should have been placed in the same class of purchaser as the Aviation Division of U.S. Steel. Morse Tr. at 1362. The last purchase of jet fuel by the Aviation Division of U.S. Steel from ARCO on or before May 15, 1973, was on May 12, 1973 at a price of 12.89 cents per gallon Joint Pre-Trial Stipulation ("JPS") Appendix A, p. 2; Defendant's Exhibit ("D.Ex.") 84, and ARCO billed Eastern throughout the relevant period at the 12.89 cents per gallon figure.

Eastern's contention that its proper May 15, 1973 price was 11.55 cents per gallon is based on the fact that the last sale of jet fuel from ARCO to Eastern prior to May 15, 1973 was at 11.55 cents per gallon on January 31, 1973 pursuant to a sales contract between the parties which expired that day.¹⁰ From that day forward Eastern was not a contract purchaser from ARCO. However, the regulations require that the parties have an "ongoing commercial relationship" on May 15, 1973, pursuant to which Eastern could be considered to have been a "present customer" of ARCO on that date before ARCO would be justified in using Eastern's last purchase before May 15, 1973 as a base price. Pacific Supply Co-Op. v. Shell Oil Co., 697 F.2d 1084, 1088 (Em.App.1982), and authorities cited therein. Since it is evident that Eastern was not a present customer of ARCO on May 15, 1973, ARCO had to place Eastern in a class of purchaser which did contain present customers on May 15, 1973. Pacific Supply Co-Op. v. Shell, supra, at 1088.

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