Guyott Company v. Texaco, Inc.

• Decision Date: 24 June 1966
• Docket Number: Civ. No. 8629.
• Citation: 261 F. Supp. 942
• Court: U.S. District Court — District of Connecticut
• Parties: The GUYOTT COMPANY, Plaintiff, v. TEXACO, INC., Defendant.

261 F. Supp. 942

The GUYOTT COMPANY, Plaintiff, v. TEXACO, INC., Defendant.

Civ. No. 8629.

United States District Court D. Connecticut.

June 24, 1966.

COPYRIGHT MATERIAL OMITTED

John D. Fassett, of Wiggin & Dana, New Haven, Conn., for plaintiff.

Morris Tyler, of Gumbart, Corbin, Tyler & Cooper, New Haven, Conn., and James O. Sullivan, Stamford, Conn., for defendant.

TIMBERS, Chief Judge.

Defendant Texaco, Inc. (Texaco) has moved, pursuant to Rule 56(b), Fed.R. Civ.P., for partial summary judgment in its favor dismissing the second count of the complaint in which plaintiff The Guyott Company (Guyott) claims damages resulting from alleged price discrimination by Texaco in the sale of paving asphalt in Connecticut during the period April 9, 1959 to July 29, 1960.

Texaco's summary judgment motion is based on the pleadings, depositions and documentary exhibits. Viewing the inferences to be drawn from the underlying facts contained in these materials in the light most favorable to plaintiff as the party opposing the instant motion, United States v. Diebold, Inc., 369 U.S. 654, 655 (1962), the Court holds that there are genuine issues as to material facts which are not susceptible of summary adjudication but must await determination at trial, and that defendant is not entitled to judgment as a matter of law. Gordon v. Vincent Youmans, Inc., 358 F.2d 261 (2 Cir. 1965).

Texaco's motion for partial summary judgment accordingly is denied.

JURISDICTION

Jurisdiction is based on Sections 2(a) and 4 of the Clayton Act, 15 U.S.C. §§ 13 (a) and 15.

FACTS

In 1956 Texaco, a refiner and supplier of petroleum products, acquired a terminal facility in New Haven for the storage and distribution of paving asphalt, a liquid petroleum product used in the manufacture of paving mix. This facility, located at the New Haven harbor on land owned by Wyatt, Inc., was built and operated by Wyatt. Texaco leased the terminal facility from Wyatt. Prior to 1956 Texaco's only terminals for distribution of paving asphalt in the New England area were located at Bayonne, New Jersey and Providence, Rhode Island. Texaco also had a refinery at Providence.

Having no terminal in Connecticut prior to 1956, Texaco sold minor quantities of paving asphalt in the state. By acquiring a New Haven supply point, Texaco hoped to obtain a larger share of the Connecticut market which was becoming increasingly active due to the state's expanding road building program. Other suppliers competing with Texaco for the same market during the relevant period were Socony Mobil, Shell and American Bitumels.

Guyott has been a distributor of paving asphalt in Connecticut for more than twenty years. Known in the asphalt trade as a "carrier", Guyott maintains a fleet of insulated trucks in which paving asphalt, delivered to a terminal in the refiner's tank ships, can be transported from the terminal. The asphalt, maintained by the refiner in heated tanks at the terminal, is pumped into Guyott's insulated trucks and delivered at substantially the same temperature to heated tanks maintained by asphalt users. The users, termed "mixers" in the trade, blend the paving asphalt with other ingredients—primarily stone, gravel and trap rock—into road mix, which they either apply directly to road beds or sell to construction contractors who apply it. Guyott purchases paving asphalt from suppliers for resale to mixers for its own account; it also transports asphalt as a common carrier for suppliers selling directly to mixers. Most of Guyott's income is derived from its trucking operations.

Prior to Texaco's acquisition of a New Haven terminal, Socony Mobil was Guyott's primary supplier. Other distributors competing with Guyott for the sale of paving asphalt were Vinci, Ford Brothers, Cronin and Elm Oil. These distributors conducted their hauling operations under license from the Connecticut Public Utilities Commission (P.U.C.); the rates charged for hauling paving asphalt from the supplier's terminal to the mixing plants were determined by the P.U.C. In addition to these competing distributors, certain suppliers, such as Shell, Socony Mobil, American Bitumels, Esso, Cities Service, and ultimately Texaco, sold directly to mixers, thereby competing with Guyott and other distributors.

New Haven Trap Rock (Trap Rock) is the largest mixer in Connecticut. It operates plants in North Branford, North Haven, Plainville, Wallingford, and Newtown. From 1949 to 1956 Guyott supplied an undetermined percentage of Trap Rock's paving asphalt requirements at these plants with the Socony Mobil product. Guyott hauled asphalt which Socony Mobil sold directly to Trap Rock; it also resold to Trap Rock asphalt which Guyott purchased from the Socony Mobil terminal. Trap Rock's competitors in the manufacture and sale of road mix in Connecticut were Tomasso in North Haven, Leverty & Hurley in Waterbury, Suzio in Meriden and Norwalk Asphalt & Paving Corporation in Norwalk. At various times from 1956 through 1960 Guyott resold and hauled asphalt to these mixers.

On March 5, 1956 Texaco and Guyott entered into a written contract pursuant to which Texaco agreed for a 10 year period to sell paving asphalt to Guyott at Texaco's New Haven terminal. The price was stated to be "Seller's established price at New Haven, Connecticut, less $1.25 per ton, provided such established price is competitive with the prices of other sellers of like asphalt in the market area to be served" (Plaintiff's Exhibit 22 for identification). Texaco did not agree to market its asphalt exclusively through Guyott, nor was Texaco to be Guyott's sole supplier. Texaco was not bound to supply Guyott at the stated price more than 8000 tons per month. The contract provided for an annual minimum of 25,000 tons and an annual maximum of 35,000 tons.

Texaco's New Haven terminal was not in operation until late in the summer of 1956. Guyott purchased 22,000 tons from Texaco annually in 1957 and 1958 and approximately 25,000 tons in 1959. In 1957 and 1958 Guyott resold approximately 7,000 tons to Trap Rock's Newtown, Plainville and Wallingford plants —the entire asphalt requirements of those plants. Socony Mobil retained the account for Trap Rock's North Branford and North Haven plants where most of Trap Rock's total paving asphalt requirements was consumed.

In 1956, 1957 and 1958 Texaco made few direct sales of paving asphalt to Connecticut mixers. Beginning in 1959, however, and throughout the period during which the price discrimination here alleged took place (April 9, 1959 to July 29, 1960), Texaco sold directly to Trap Rock's Newtown, Plainville and Wallingford plants 7,300 tons of paving asphalt, supplanting Guyott as the supplier of those plants. The 7,300 tons Texaco sold directly to Trap Rock, however, was transported to the Trap Rock plants in Guyott trucks. For its trucking services Guyott charged Texaco hauling rates prescribed by the P.U.C., which averaged $2.75 per ton. During this period Socony Mobil continued to retain the larger accounts at Trap Rock's North Branford and North Haven plants.

Texaco charged Trap Rock a delivered price of $19.25 per ton. This figure included the charges for hauling the paving asphalt in Guyott trucks from Texaco's New Haven terminal to Trap Rock's three plants. Texaco apparently paid the delivery charges directly to Guyott. During the same period Texaco charged Guyott prices for paving asphalt which varied from $17.50 to $18.00 per ton F.O.B. the New Haven terminal.

PROCEEDINGS IN THIS COURT

On December 30, 1960 Guyott commenced an action against Texaco for breach of the March 5, 1956 written contract for the sale of paving asphalt. Deducting the delivery charges paid by Texaco on sales to Trap Rock, Guyott alleged that Texaco actually was receiving a lower price from Trap Rock and, therefore, had breached that part of the contract which bound Texaco to sell to Guyott at Texaco's "established price" at New Haven, less $1.25 per ton. Plaintiff, having been granted leave to amend its complaint May 21, 1962, added a second count alleging in substance that the lower net price Texaco charged Trap Rock also constituted indirect price discrimination proscribed by Section 2(a) of the Clayton Act.

CLAIMS OF THE PARTIES

As a result of Texaco's alleged price discrimination in favor of Trap Rock, Guyott claims that its business was injured in the following ways:

(i) Guyott's ability to compete with its competitors (presumably other distributors of paving asphalt) was impaired, resulting in lost sales and profits;

(ii) Guyott's ability to compete with defendant for sales of paving asphalt to Trap Rock was impaired, resulting in lost profits; and

(iii) Guyott's customers other than Trap Rock, due to their inability to compete with Trap Rock in the sale of paving mix to construction contractors, reduced their purchases from Guyott, resulting in lost sales and profits.

In its motion for partial summary judgment addressed to the second count of the complaint, Texaco asserts that:

(i) The price Guyott paid Texaco for paving asphalt was in fact lower than the delivered price paid by Trap Rock—the only relevant price for purposes of computing price differential under the Robinson-Patman Act— and hence there was no detrimental price difference essential to establishing a price discrimination claim;

(ii) Guyott, a distributor, not being a competitor of Trap Rock, a so-called "mixer", cannot maintain a secondary line price discrimination action in which it is necessary to show, in order to prove the adverse effect on competition required by Section 2(a), that the alleged disfavored purchaser was in competition with the alleged favored purchaser; and

(iii) Guyott cannot maintain a primary line price discrimination action against Texaco because Guyott, a distributor, was not a competitor of Texaco, a supplier; but, even assuming it could be considered in competition, absent a showing that (a) Texaco predatoril

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