Farmers Co-Operative Oil Co. v. SOCONY-VACUUM O. CO., 97.

• Decision Date: 16 March 1942
• Docket Number: No. 97.,97.
• Citation: 43 F. Supp. 735
• Parties: FARMERS CO-OPERATIVE OIL CO. v. SOCONY-VACUUM OIL CO., Inc., et al.
• Court: U.S. District Court — Northern District of Iowa

43 F. Supp. 735

FARMERS CO-OPERATIVE OIL CO. v. SOCONY-VACUUM OIL CO., Inc., et al.

No. 97.

District Court, N. D. Iowa, W. D.

March 16, 1942.

E. G. Dunn (of Dunn & Danforth), and Leonard Simmer, all of Mason City, Iowa, for plaintiff.

Deloss P. Shull, Henry C. Shull, and Jesse E. Marshall (of Shull & Marshall), all of Sioux City, Iowa, and David T. Searls, of Chicago, Ill., for defendants.

SCOTT, District Judge.

Farmers Co-Operative Oil Company, "for itself, and in behalf of all of its Members who were Members from March 6th, 1935, to December 22nd, 1936", files its complaint against twelve oil companies each alleged to be a corporation organized under the laws of a State other than Iowa, eight of which corporations, however, are alleged to have been doing business in Iowa during the years 1935 and 1936. That the corporations so alleged to have been doing business in Iowa are as follows: Socony-Vacuum Oil Company, Inc., Continental Oil Company, the Pure Oil Company, Shell Oil Company, Inc., formerly Shell Petroleum Corporation, Sinclair Refining Company, Mid-Continent Petroleum Corporation, Phillips Petroleum Company and Skelly Oil Company. The eight corporations alleged to have been doing business in Iowa have been served and appear. The four remaining corporations not alleged to have been doing business in Iowa are returned by the marshal as not found. It may therefore be assumed for the purposes of the case that the eight corporations served and appearing are the sole defendants, as the case as to the other four is vulnerable to dismissal both for want of jurisdiction and for faulty venue.

The action is brought by plaintiff as a class action under Rule 23 of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, applicable to this Court to recover for itself and for its members $96,597.90, as treble damages sustained under the provisions of 15 U.S.C.A. § 15. The action is brought against the defendants because of the alleged conspiracy of which the defendants are alleged to have been convicted on the 19th day of July, 1938, in the United States District Court for the Western District of Wisconsin, United States v. Standard Oil Co., 23 F.Supp. 937, in the case later in the Supreme Court of the United States, entitled United States v. Socony-Vacuum Oil Company et al., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129. The indictment in that case is exhibited on the complaint here and its contents are largely repeated in the several paragraphs of the complaint. Concisely stated, the substance of the complaint is that defendants combined and conspired together for the purpose of artificially raising and fixing the price of tank car gasoline in the spot markets in the East-Texas and Mid-Continent fields, and for artificially raising and fixing said tank car prices of gasoline and maintaining said prices at artificially high and noncompetitive levels, and that as a result of such conspiracy the price of gasoline in tank car quantities during the period named, to-wit, from March 6, 1935, to December 22, 1936, was maintained at an artificial level above that which the plaintiff's members would have enjoyed under unrestricted competition. The plaintiff alleges the purchase of approximately a million and a quarter gallons of gasoline at such illegally enhanced price, and that an excess of 2¼¢ per gallon was unlawfully exacted from it, and which plaintiff was obliged to pass on to its members by enhancing its retail price to members and others.

The plaintiff alleges that it is a cooperative association existing and operating under Chapters 389 and 390.1 of the Code of Iowa. That during the period stated it had individual members numbering seven hundred. Plaintiff further alleges: "That all property of every kind and character possessed by this association, is the property of the individual members, and all money accumulated by this association, after all obligations and necessary running expenses of said association have been paid, belongs to the individual members, in proportion to the amount of purchases of products handled by the association for the individual members thereof."

The defendants served appear and file motion to dismiss the complaint upon the following grounds:

"(a) Plaintiff has not the capacity to sue for and on behalf of its 700 members who were members from March 6, 1935 to December 22, 1936;

"(b) Plaintiff is not the real party in interest in asserting a claim for injuries to the property or business of said 700 members of plaintiff from March 6, 1935 to December 22, 1936, in that plaintiff does not own the legal or the beneficial right to sue for such alleged injuries and is not entitled to recover damages, if any, suffered by such individual members, but such claims must be asserted by the members;

"(c) The allegations of the complaint are insufficient to show that plaintiff has a right to sue in behalf of its members;

"(d) The relief sought by plaintiff is not common to all of its members;

"(e) The right of the plaintiff, and each of its members, to recover damages from defendants is separate and distinct depending upon evidence peculiar to each and varying as to plaintiff and its different members;

"(f) Plaintiff does not adequately represent its members in this proceeding;

"(g) Plaintiff and its members do not constitute a complete and single group having a distinct relationship with identical claims against defendants;

"(h) Plaintiff and its members are not similarly situated."

I shall not undertake to discuss each ground of the motion separately, as I think they might well have been molded into two or three instead of eight grounds. The grounds may, however, be fairly recited to include (a) "failure to state a claim upon which relief can be granted", (b) that plaintiff and its members are not similarly situated, and (c) the complaint fails to meet the requirements of Rule 23 prescribing the essentials of a class action.

Defendants served and filed briefs in support of their motion, and the plaintiff served and filed a brief in resistance thereto. The parties asked to be heard orally and were granted leave and on the 3rd inst., appeared and presented oral argument, upon which the motion to dismiss was submitted.

The complaint on its face is clearly an attempt to bring a class suit. There is little to be found in books on the subject of class actions, indeed, so exhaustive a work as Corpus Juris gives them but a single paragraph, 11 C.J., Class Suit, p. 830, and cites a single case. I quote from that case, Seminole Securities Co. v. Southern Life Ins. Co., C.C., 182 F. 85, at page 96, in which this language is found: "This is what is called in works on equity practice a `class suit,' in which one or more members of a numerous class, having a common interest, may sue in behalf of themselves and all other members of the class. The jurisdiction is well settled. Such suits are sometimes called `creditors' suits,' and sometimes, as in this instance `stockholders' suits.' Provision is made in the federal courts for such suits by Equity Rule 48; 1 Sheet's Fed.Eq.Pr. 539 et seq."

An examination of all suits of this character leaves no doubt that "class suits" are creatures...