Go-Tane Service Stations, Inc. v. Clark Oil & Refining Corp.

• Decision Date: 31 July 1986
• Docket Number: No. 7-16.,7-16.
• Citation: 798 F.2d 481
• Parties: GO-TANE SERVICE STATIONS, INC., Plaintiff-Appellee, v. CLARK OIL & REFINING CORPORATION, Defendant-Appellant.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

798 F.2d 481

GO-TANE SERVICE STATIONS, INC., Plaintiff-Appellee, v. CLARK OIL & REFINING CORPORATION, Defendant-Appellant.

No. 7-16.

Temporary Emergency Court of Appeals.

Argued May 12, 1986.

Decided July 31, 1986.

Rehearing and Rehearing Denied September 15, 1986.

COPYRIGHT MATERIAL OMITTED

Wayne E. Babler, Jr., with whom Nancy K. Peterson, Quarles & Brady, Milwaukee, Wis., were on brief, for defendant-appellant.

John B. Williams, Collier, Shannon, Rill & Scott, Washington, D.C., was on brief, for plaintiff-appellee.

Before CHRISTENSEN, JAMESON and MAXWELL, Judges.

Rehearing and Rehearing En Banc Denied September 15, 1986.

PER CURIAM.

Go-Tane Service Stations, Inc. (Go-Tane), plaintiff-appellee, filed this action in district court on April 25, 1979, alleging violations of the Economic Stabilization Act of 1970 (ESA), section 210, 12 U.S.C. § 1904 note, as incorporated by reference in § 5(a) of the Emergency Petroleum Allocation Act (EPAA), 15 U.S.C. §§ 751-760h, and seeking recovery of over-charges and lost profits. The claims were tried to a jury over the affirmative defense of Clark Oil and Refining Corp. (Clark), defendant-appellant, that the claims were barred by Illinois' five year statute of limitations.¹ The jury returned a verdict in favor of Go-Tane for $279,667.00 gasoline overcharges and $2,967,466.00 lost profits. We reverse in part and affirm in part, holding (1) that the claims for overcharges arose more than five years before the commencement of the action and cannot be saved by resort to any continuing violation or kindred theory, and (2) that the claim for wrongful allocation injury first occurred within the five year period and was not barred or otherwise invalid.

I. Background

Go-Tane is an unbranded wholesale buyer-reseller of motor gasoline. Clark is a refiner of motor gasoline and was one of Go-Tane's principal suppliers, as well as the supplier of its own branded retail dealers. Prior to 1973, Clark sold gasoline to unbranded wholesale accounts such as Go-Tane at prices lower than the prices to its branded retail dealers.

On August 20, 1973, the regulations promulgated under ESA became effective. 10 C.F.R. parts 210-212.² The pricing regulations precluded a refiner from charging a price in excess of the maximum allowable price equalling the weighted average selling price (WASP) it charged to the respective classes of purchaser on (or if there were no sales on that date, last before) May 15, 1973, plus certain increased costs. 10 C.F.R. § 212.82.³ Clark admitted that it incorrectly used an August 20, 1973 WASP rather than the correct May 15, 1973 WASP, thus increasing prices charged Go-Tane with reference to prices charged Clark's own branded dealers, in reversal of its historical practice and substantially altering the price differential between the two classes.⁴ Clark first overcharged Go-Tane in December 1973.

In its second amended complaint Go-Tane alleged six causes of action. The district court, in an order dated June 7, 1984, held that the statute of limitations barred recovery of overcharges for violation of the pricing regulations under count I caused by an overinflated May 15 WASP, improper classification of Go-Tane, and failure to maintain customary price differentials, and under count III, caused by the imposition of stricter credit terms. The district court further held that the statute of limitations did not bar recovery of overcharges for violation of the pricing regulations under count II, caused by improper product and non-product cost increases, and count IV, caused by improper recoupment of banked costs; nor did it bar recovery of lost profits for violation of the normal business practices rule under count V caused by the failure to maintain the customary price differential among classes of purchasers. Go-Tane withdrew count VI for recovery of treble damages at the final pretrial conference. The parties in their briefs collectively refer to counts I through IV as the price claims, and to count V as the allocation claim.

In a subsequent order, dated July 26, 1984, the district court in effect reversed its earlier holding. It reasoned that counts II and IV could not be proved without first proving violation under count I. At trial Go-Tane recovered on all alleged pricing claims and on the allocation claim.

II. Issues on Appeal

Despite the wide range and complexities of the briefing, the problems before us on this appeal are quite narrow, as follows:

(1) whether the district court correctly held that the statute of limitations barred neither the price claims nor the allocation claim;

(2) whether the district court correctly instructed the jury that failure to maintain the customary price differential violated the normal business practices rule, 10 C.F.R. § 210.62; and

(3) whether the district court abused its discretion when it permitted Go-Tane to use at trial expert computer computations not disclosed during discovery.

We consider these issues in order.

III. The Statute of Limitations Bar

A. The Price Claims

The statute of limitations begins to run when an act with decisive continuing effect causes initial injury at a given time, and the statute is not tolled with respect to continued injury of similar character following from the same act. CPI Crude, Inc. v. Coffman, 776 F.2d 1546, 1552-53 (TECA 1985); Oerther v. Pennzoil Co., 763 F.2d 420, 421-22 (TECA 1985); Lerner v. Atlantic Richfield Co., 731 F.2d 898, 901 (TECA 1984); Western Mountain Oil, Inc. v. Gulf Oil Corp., 726 F.2d 765, 768 (TECA 1983); Fleetwing Corp. v. Mobil Oil Corp., 726 F.2d 768, 770 (TECA 1983).

Each price claim alleged by Go-Tane hinges on an improper act initiated by Clark with knowledge and over protest of Go-Tane and with injurious consequences to Go-Tane more than five years before the filing of the action. See Lerner, 731 F.2d at 900. Count I stemmed from the misclassification of Go-Tane, count III from the discontinuation of favorable credit terms, both acts occurring prior to April 25, 1974. In its June 7 order, the district court appropriately found counts I and III barred by the statute of limitations. Likewise, improper product and non-product cost increases under count II and improper recoupment of banked costs under count IV resulted from the use of an incorrect August 20th WASP, an act occurring more than five years before the action was filed. See 10 C.F.R. § 212.83(c), (h). The district court should have disallowed recovery on all price claims predicated on a single improper act. Lerner, 731 F.2d at 900.

The district court, however, allowed recovery for all overcharges collected within the five year period upon the jury's determination that "in addition to the use of an incorrect May 15, 1973 price" Clark made other errors calculating the price charged to Go-Tane between April 25, 1974 and March 1, 1979, in violation of the Refiner Price Rule and that "these additional violations resulted in further overcharges beyond those resulting from the use of any incorrect May 15th price." Interrogatories (2) and (3), App. 303-304. Aside from the quantification of damages, the district court determined all other questions bearing upon the statute of limitations as matters of law.

Go-Tane attempts to sustain the district court's ruling on the price claims by simply repeating the court's ipse dixit that the overcharges here were "plain" within the meaning of Johnson Oil Co., Inc. v. DOE, 690 F.2d 191, 196 (TECA 1982), without attempting to define the term as employed in that case.⁵ It argues that Clark made "errors in addition to the May 15, 1973 base price error which increased the amount of overcharges," and that "Go-Tane therefore sustained its burden of demonstrating `plain overcharges.'"

Although Johnson did not refer to "plain overcharges," our subsequent decisions employed the term to distinguish Johnson.

While Johnson lends some support to plaintiff's contention that in a plain overcharge action each alleged overcharge should constitute a separate cause of action, this court was not squarely faced with that issue in Johnson. The conclusionary language in the directions to the district court upon remand should not be broadly construed to constitute a holding that each overcharge amounts to a separate cause of action.

CPI Crude, 776 F.2d at 1553. The price claims presented by Go-Tane do not constitute plain overcharges, as the term was used in CPI Crude. The price claims, instead, resulted from an underlying act causing the claims to accrue at a time barred by the statute of limitations.

We need not speculate here concerning what the rule should be had both types of overcharges spanning the period of limitations been involved. Subsequent errors in addition to Clark's basic one were asserted by Go-Tane, but review of the record persuades us that there is no substantial evidence that they could have contributed in any significant degree to the overcharges found by the jury. The trial court itself made no finding with respect to this, and as has already been noted, submitted to the jury the questions of whether there were within the period of limitations errors in addition to the incorrect May 15 pricing and whether they resulted in additional overcharges, but asked for no quantification whatsoever, and understandably so in view of the insufficiency of the evidence.

We conclude that Go-Tane's claim for overcharges, as such, based as it was upon an unlawful pricing practice applied by Clark with knowledge and over protest of Go-Tane with consequent injury beginning more than five years before the filing of this action, was barred by the applicable statute of limitations.

B. The Allocation Claim

With respect to the allocation claim, count V of the second amended complaint, the statute of limitations problem is significantly different. While necessarily relating to the separate overcharge claim, the differentiating gist of its foundation is the general...