General Chemicals, Inc. v. Exxon Chemical Co., USA, 78-2819

• Decision Date: 18 September 1980
• Docket Number: No. 78-2819,78-2819
• Parties: 1980-2 Trade Cases 63,538 GENERAL CHEMICALS, INC., Plaintiff-Appellant, v. EXXON CHEMICAL COMPANY, USA, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1231

625 F.2d 1231

1980-2 Trade Cases 63,538

GENERAL CHEMICALS, INC., Plaintiff-Appellant, v. EXXON CHEMICAL COMPANY, USA, et al., Defendants-Appellees.

No. 78-2819.

United States Court of Appeals, Fifth Circuit.

Sept. 18, 1980.

Baggett, McCall, Singleton, Ranier & Ieyoub, J. Michael Veron, Drew A. Ranier, Lake Charles, La., for plaintiff-appellant.

Stockwell, Sievert, Viccellio, Clements & Shaddock, William E. Shaddock, Oliver P. Stockwell, Lake Charles, La., for Exxon, Martin, Dyer, Miller, Perlman & Baranski.

Jones, Patin, Harper, Tete & Nolen, Kenneth R. Spears, Lake Charles, La., for Bamberger Molding & Bamberger.

Appeal from the United States District Court for the Western District of Louisiana.

Before THORNBERRY, FRANK M. JOHNSON, Jr. and HENDERSON, Circuit Judges.

HENDERSON, Circuit Judge;

The appellant filed this antitrust action for damages in the United States District Court for the Western District of Louisiana, against Exxon Chemical Company USA (hereinafter referred to as "Exxon"), Claude Bamberger Molding Compounds Corporation (hereinafter referred to as "Bamberger Compounds"), Claude Bamberger and other individual employees and officers of Exxon. The district court granted summary judgment to all the defendants and the plaintiff, General Chemicals, Inc., appealed. We affirm.

As an incident to the operation of its chemical refinery at Baton Rouge, Louisiana, Exxon produces approximately five million tons per year of low-density polyethylene scrap. Although this scrap has some value, especially in such great volume, it is something of a nuisance to Exxon, which has no place to store it. Consequently, a major, if not primary, consideration in deciding whom to sell the scrap is the potential buyer's ability to move it on demand.

For a while Exxon sold all its scrap to Bamberger Compounds. The rapid rise in the cost of oil during the early 1970's was reflected in scrap prices, and Exxon began to take bids on a quarterly basis. Early in 1975 it accepted bids for the following three quarters. Bamberger Compounds was the high bidder. However, Bamberger Compounds was unable to move the scrap expeditiously, and new bids were solicited for the fourth quarter of 1975. General Chemicals, Inc., was the high bidder in this bidding, but was only awarded part of the scrap. Bamberger Compounds, despite submitting a lower bid, received approximately twice as much scrap as the appellant. Each lot of scrap was sold at the price its purchaser bid, so Bamberger Compounds paid less per pound than General Chemicals, Inc. The allocation for the first quarter of 1976 was similar; but for the second quarter the bid of General Chemicals, Inc., was lower than that of Bamberger Compounds, and Exxon sold Bamberger Compounds all the scrap.

Thereafter General Chemicals, Inc., brought this suit, seeking recovery for (1) a conspiracy between Bamberger Compounds and Exxon to exclude General Chemicals, Inc., from the scrap market, in violation of § 1 of the Sherman Act, 15 U.S.C.A. § 1; (2) breach of contract; and (3) fraud. General Chemicals, Inc., dropped the fraud count in its first amended complaint. Each of the defendants subsequently moved for summary judgment, claiming that Exxon was free to give its business to whomever it chose and that the plaintiff had entirely failed to come forward with evidence of a conspiracy. Before these motions were decided, the plaintiff again amended the complaint, with leave of the court, to allege that the sales to Bamberger Compounds at prices lower than those charged General Chemicals, Inc., violated § 2(a) of the Robinson-Patman Act, 15 U.S.C.A. § 13(a). ¹ Responding thereto, the defendants asserted that Bamberger Compounds sent all scrap it purchased to Hong Kong immediately upon delivery, therefore exempting it from act's coverage.

In granting summary judgment to the defendants the court noted that Exxon "has the right to select its customers and to refuse to sell its goods to anyone for reasons sufficient to itself," quoting Southern Distributing Co. v. Southdown, Inc., 574 F.2d 824, 827 (5th Cir. 1978). He went on to "find that no evidence has been presented to indicate or prove that the defendants were engaged in an unlawful combination and conspiracy to restrain and monopolize the chemical scrap business." Opinion of June 20, 1978, at 4. The court did not mention the price-discrimination claim, ² but the opinion clearly granted summary judgment on all causes, and the parties have so interpreted it. ³

Although "summary (judgment) procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles," Poller v. Columbia Broadcasting Systems, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458, 464 (1962), we are satisfied that the grant of summary judgment was warranted here. See generally, First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); S&M Materials Co. v. Southern Stone Co., 612 F.2d 198 (5th Cir. 1980); Alladin Oil Co. v. Texaco, Inc., 603 F.2d 1107 (5th Cir. 1979).

The appellant's Sherman Act cause of action may be fairly stated as follows: Exxon and Bamberger Compounds conspired to drive General Chemicals, Inc., from the scrap business and attempted to effectuate the plan by selling Bamberger Compounds the scrap to the exclusion of General Chemicals, Inc. There can be no argument but that Exxon was free to give its business to whomever it chose, so long as it was not motivated by an anti-competitive purpose. United States v. Parke, Davis and Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960); United States v. Colgate and Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919); Alladin Oil Co.; Southern Distributing Co. on the other hand,

sellers do not have an antitrust carte blanche to select those with whom they will deal. On the contrary, a refusal to deal becomes unlawful when it produces an unreasonable restraint on trade, i. e., if there is an anti-competitive purpose or effect in selecting those with whom one will deal. A refusal to deal may not be used as a device to achieve some anti-competitive goal such as to acquire a monopoly, or to fix prices, or to establish market dominance . . ..

Alladin Oil Co., 603 F.2d at 1115 (footnotes omitted).

The question, then, is whether illegitimate considerations were behind Exxon's choice of customers. The appellant urges that Exxon's decision to sell scrap to Bamberger Compounds at a price less than that General Chemicals, Inc., was willing and able to pay implies that there existed a conspiracy to eliminate competition. Because this is an insupportable inference summary judgment was proper.

The major factual question in this case is whether there was a conspiracy. Even a successful antitrust plaintiff will seldom be able to offer a direct evidence of a conspiracy and such evidence is not a requirement. See, e. g., Norfolk Monument Co. v. Woodlawn Memorial Gardens, Inc., 394 U.S. 700, 703-04, 89 S.Ct. 1391, 1393, 22 L.Ed.2d 658 (1969). However, to...