In re Petro. Products Antitrust Litigation, 150.

• Decision Date: 31 August 1976
• Docket Number: No. 150.,150.
• Citation: 419 F. Supp. 712
• Parties: In re PETROLEUM PRODUCTS ANTITRUST LITIGATION. The City of Long Beach, as Trustee for the State of California, and the State of California, as Beneficiary v. Standard Oil Company of California, et al., C.D. Calif., Civil Action No. C-75-2232-WPG, And Other Actions.
• Court: Judicial Panel on Multidistrict Litigation

419 F. Supp. 712

In re PETROLEUM PRODUCTS ANTITRUST LITIGATION.

The City of Long Beach, as Trustee for the State of California, and the State of California, as Beneficiary v. Standard Oil Company of California, et al., C.D. Calif., Civil Action No. C-75-2232-WPG, And Other Actions.

No. 150.

Judicial Panel on Multidistrict Litigation.

August 31, 1976.

Before JOHN MINOR WISDOM, Chairman, and EDWARD WEINFELD, EDWIN A. ROBSON, WILLIAM H. BECKER,^** JOSEPH S. LORD, III,^** STANLEY A. WEIGEL,^*** and ANDREW A. CAFFREY,^*** Judges of the Panel.

OPINION AND ORDER^*

PER CURIAM.

I. BACKGROUND OF THE LITIGATION

On April 15, 1975, the Panel transferred an antitrust class action instituted by the State of Kansas against twelve major oil companies ("Kansas" hereinafter) in the District of Kansas to the District of Connecticut for coordinated or consolidated pretrial proceedings with a similar action pending in that forum and commenced by the State of Connecticut against the twelve oil producers plus eleven more. This litigation was assigned to Chief Judge T. Emmet Clarie. The Panel determined that pretrial proceedings pursuant to 28 U.S.C. § 1407 were warranted for these two actions because of, inter alia, the existence of complex common factual questions arising from similar complaints which charge common defendants with jointly and severally violating various federal antitrust laws, and which, in essence, challenge the structure and business practices of the petroleum industry on national, state and local levels. In re Petroleum Products Antitrust Litigation, 393 F.Supp. 1091 (Jud.Pan.Mult.Lit. 1975). On January 21, 1976, the Panel transferred a similar antitrust class action commenced by the State of California ("California" hereinafter) against eleven of the same oil producers involved in the Kansas and Connecticut actions to the District of Connecticut for inclusion in the Section 1407 pretrial activities. Again, the presence of common defendants and complex common factual questions was a primary reason for transfer. In re Petroleum Products Antitrust Litigation, 407 F.Supp. 249 (Jud.Pan.Mult.Lit.1976).

Subsequently, on February 13, 1976, defendants Standard Oil Company of California, Shell Oil Company ("Shell" hereinafter) and Exxon Corporation ("Exxon" hereinafter) moved the Panel for an order transferring the above-captioned City of Long Beach action ("Long Beach" hereinafter) pending in the Central District of California before Judge William P. Gray, to the District of Connecticut for inclusion in the Section 1407 proceedings. Thereafter, defendant Union Oil Company similarly moved the Panel and, alternatively, requested retransfer of California to the Central District of California for only coordinated pretrial proceedings with Long Beach pursuant to Section 1407. In addition, defendant Atlantic Richfield Company submitted a letter requesting the Panel to enter an order conditionally transferring Long Beach to the District of Connecticut.¹ Defendants Gulf Oil Corporation ("Gulf" hereinafter) and Mobil Oil Corporation ("Mobil" hereinafter) each responded supporting the motions to transfer Long Beach to the District of Connecticut. Plaintiff State of Connecticut responded favoring transfer of Long Beach to Connecticut and opposing defendant Union's motion to retransfer California to the Central District of California. Plaintiffs State of California and City of Long Beach individually opposed the various motions to transfer Long Beach to the District of Connecticut. Plaintiff State of California, however, supported defendant Union's motion to retransfer California to the Central District of California for solely coordinated pretrial proceedings with Long Beach and, in addition, stated that California also could be retransferred to the Northern District of California for inclusion in coordinated pretrial activities with Long Beach there.

At the Panel hearing held on March 26, 1976, regarding defendants' motions, it became apparent to the Panel that, instead of solely determining whether Long Beach should be transferred to the District of Connecticut for inclusion in the Section 1407 pretrial proceedings there, the unique development of this litigation might require retransfer of some or all of these actions to another district for coordinated or consolidated pretrial activities. Consequently, the Panel deferred ruling on defendants' motions and issued an order on March 29, 1976, to every party involved in Kansas, Connecticut, California and Long Beach to show cause why the three actions pending in the District of Connecticut should not be retransferred pursuant to Section 1407 to the Central District of California for coordinated or consolidated pretrial proceedings with Long Beach. Plaintiffs Connecticut, Kansas, Florida² and California now favor retransfer of the previously transferred actions to the Central District of California. Plaintiff California alternatively requests that the Northern District of California be designated as the transferee district. Plaintiff Long Beach still prefers that its action be left alone in the Central District of California. Apparently anticipating that Florida would soon be included in this litigation, plaintiff City of Long Beach alternatively suggests bifurcated pretrial processing of this litigation, whereby Kansas, Connecticut and Florida would proceed before Chief Judge Clarie in the District of Connecticut, while Long Beach and California would proceed before Judge Gray in the Central District of California. As a third alternative, the City of Long Beach favors retransfer of the entire litigation to the Central District of California. Opposed to retransfer are 22 defendants involved in one or more of the four actions other than Florida.³

Since certain defendants have moved the Panel for an order transferring Long Beach to the District of Connecticut under Section 1407, a unique combination of unanticipated material facts have been revealed concerning the relationship of Long Beach with California, Kansas, Connecticut and Florida, individually and collectively. As a result, we have found it necessary to reexamine our prior decisions concerning transfers of this litigation. On the initiative of the Panel, we therefore consider our March 29, 1976, order to show cause why this litigation should not be retransferred as a rehearing of plaintiff Connecticut's original motion to transfer some of these actions to a single forum for coordinated or consolidated pretrial proceedings and also as a rehearing of our original selection of the District of Connecticut as the transferee district, as well as a subsequent request to retransfer this litigation elsewhere. Hence, upon consideration of the papers submitted and the oral arguments heard, we find that Long Beach and Florida share common factual questions with the previously transferred litigation and that transfer of Florida, California, Kansas and Connecticut to the Central District of California for coordinated or consolidated pretrial proceedings with Long Beach pursuant to Section 1407 will best serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation. To that end, on rehearing, under the unique combination of circumstances, we vacate the original orders of transfer to the District of Connecticut.

II. THE LONG BEACH AND FLORIDA ACTIONS

Long Beach was commenced by the City of Long Beach, as statutory trustee for the State of California, against seven major oil companies and Thums Long Beach Company, a company wholly-owned by five of the companies, alleging violations of federal and state antitrust laws and breach of contract. Thereafter, the State of California became a named plaintiff. The complaint in Long Beach alleges that the City of Long Beach is the owner of certain tidelands and submerged lands conveyed to it by the State of California. Within this area lies Tract I of the Long Beach Unit, Wilmington Oil Field, which is a tract of land that, together with certain other parcels of land within the city limits of Long Beach, is committed to a unitized oil and gas production operation. It also is alleged that the seven defendant oil companies are producers, purchasers, transporters, refiners and marketers of crude oil and refined oil products within the State of California. Of these defendants, Texaco, Mobil, Union, Exxon, and Shell jointly constitute the Field Contractor of the Long Beach Unit, which is entitled and obligated to take an undivided 80 percent of the oil and gas produced from the Long Beach Unit that is allocated to Tract I. As the Field Contractor, these defendants, acting under the direction and control of the City of Long Beach, have the exclusive right, responsibility and obligation to conduct daily operations for the exploration and development of Tract I. In return, these defendants are obligated to pay to the City of Long Beach a percentage of the revenues derived from the production and sale of the oil and wet gas products produced from the Long Beach Unit and allocated to Tract I, after the deduction of certain expenses. The revenues payable to the City of Long Beach are affected directly and proportionately by the nature of the oil allocated to Tract I when such oil is taken by defendants as the Field Contractor. The two remaining defendants, Standard and ARCO, and two nondefendant oil companies, constitute the two Nonoperating Contractors of the Long Beach Unit, each group being entitled and obligated to take an undivided ten percent of the oil and gas produced by the Long Beach Unit and allocated to Tract I. In all other respects previously stated, their situation is similar to the other defendant oil producers operating as the Field Contractor. Thums, the eighth defendant, is a joint venture crude oil production corporation formed and wholly-owned by five defendants, Texaco, Mobil, Exxon, Union and Shell. In substantial part, Thums...