Intermar, Inc. v. Atlantic Richfield Company, Civ. A. No. CA 73-1397.

• Decision Date: 09 August 1973
• Docket Number: Civ. A. No. CA 73-1397.
• Citation: 364 F. Supp. 82
• Parties: INTERMAR, INC., t/a Super Sonic Car Wash v. ATLANTIC RICHFIELD COMPANY.
• Court: U.S. District Court — Eastern District of Pennsylvania

364 F. Supp. 82

INTERMAR, INC., t/a Super Sonic Car Wash v. ATLANTIC RICHFIELD COMPANY.

Civ. A. No. CA 73-1397.

United States District Court, E. D. Pennsylvania.

August 9, 1973.

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Daniel B. Berkson, Philadelphia, Pa., for plaintiff.

Robert M. Landis, Dechert, Price & Rhoads, Philadelphia, Pa., for defendant.

FINDINGS OF FACT, CONCLUSIONS OF LAW AND DISCUSSION

TROUTMAN, District Judge.

Introduction

On Friday, June 22, 1973, the plaintiff, the owner and operator of a retail gasoline station in the City of Philadelphia, filed with this Court its complaint and ex parte motion for a temporary restraining order and preliminary injunction, seeking to compel the defendant, a manufacturer and distributor of petroleum products, to forthwith deliver to plaintiff needed supplies of gasoline motor fuel to assure plaintiff's continued operation of its retail gasoline distributorship located at 80th and Ogontz Avenue in the City of Philadelphia. The defendant, upon contact by the Court, agreed to supply the plaintiff's gasoline needs at said station through Tuesday, June 26, 1973, thus eliminating the need for a temporary restraining order. Hearing was fixed for Wednesday, June 27, 1973, the earliest date reasonably convenient to the parties and the Court. Commencing June 27, 1973, the matter was heard through July 9, 1973.

In its complaint, the plaintiff alleged that the defendant, on or about May 25, 1973:

1. Combined or conspired with one or more of its lessee dealers (in the counties of Philadelphia, Bucks, Chester, Delaware and Montgomery — the "Philadelphia Metropolitan Area") — to suppress ARCO's large volume price discounting independent dealers in the area, including plaintiff, as effective competitors of its lessee dealers, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 et seq. (First Count of the Complaint); 2. Combined or conspired with one or more of its lessee dealers in the Philadelphia metropolitan area to raise, regulate or stabilize the prices charged the public for gasoline by its lessee dealers and its large volume price discounting independent dealers, including plaintiff, in the area, in violation of Section 1 of the Sherman Act, supra (First Count of the Complaint);

3. Committed a material breach of the "Contract Dealer Agreement" between plaintiff and defendant entered into on June 30, 1972, by failing to adhere to then general practice or to sustain a course of performance upon which plaintiff had come to rely to continue its discount gasoline business. (Fourth Count of the Complaint);

4. Discriminated against plaintiff in the allocation of gasoline to it commencing June 1, 1973, by favoring its lessee dealers at the expense of plaintiff, in that defendant failed to allocate gasoline to all of its dealers in the Philadelphia metropolitan area in a "fair and reasonable manner", but substantially reduced supplies of gasoline to plaintiff and defendant's other large volume price discounting independent dealers in the area while continuing to provide, as customary, supplies of gasoline to its lessee-dealers, in violation of §§ 1-203 and 2-615 of the Uniform Commercial Code, 12A P.S. § 1 — 203 and § 2 — 615 and in violation of the Common Law (Second Count of the Complaint).

5. Made representations to plaintiff to supply it with all plaintiff's gasoline requirements during a five-year period ending August 31, 1977, to induce plaintiff to build and expand its facilities, plaintiff relied on such representations; and, therefore, defendant is estopped from avoiding the effect of said representations. (Third Count of the Complaint)

Extended testimony and evidence was produced by the plaintiff throughout eight days of testimony, some of which consisted of the testimony of defendant's officials, which witnesses were produced by the defendant on extremely short notice in an effort to provide the Court with relevant information. Counsel have fully cooperated with the Court in reviewing the record, submitting suggested findings and conclusions and supporting memoranda.

Before the Court is defendant's motion to dismiss the plaintiff's complaint and plaintiff's application for a preliminary injunction as to which the Court makes the following

FINDINGS OF FACT

I.

The parties

1. Plaintiff, Intermar, Inc., is a Pennsylvania corporation with its main office at 130 W. Lancaster Avenue, Wayne, Pennsylvania.

2. Plaintiff owns and operates a retail gasoline station, with a car wash facility and a retail tire sales center, trading as Super Sonic Car Wash at 80th and Ogontz Avenues in Philadelphia, Pennsylvania, ("80th and Ogontz"), (Exhibits P-1 and P-2); at Castor Avenue and Van Kirk Street, Philadelphia, Pennsylvania, ("Castor and Van Kirk"); and at Germantown Avenue and DeKalb Street, Norristown, Pennsylvania, ("Norristown").

3. Plaintiff leases from ARCO and operates a retail gasoline station at Lancaster and Ardmore Avenues in Ardmore, Pennsylvania.

4. In addition, plaintiff maintains ten other retail gasoline stations in the Philadelphia and suburban areas under arrangements with oil companies other than ARCO.

5. Defendant is Atlantic Richfield Company ("Atlantic" or "ARCO"), a Pennsylvania corporation doing business at 260 S. Broad Street, Philadelphia, Pennsylvania, which is engaged in the manufacture of petroleum products and the sale of such products to wholesale distributors, retail distributors and consumers.

6. ARCO is a supplier of petroleum products, selling such products to wholesale distributors, to service station dealers and to commercial customers. Some service station dealer customers of ARCO operate on premises leased to them by ARCO ("Lessee-dealers") and some operate on premises owned by the dealer or leased to the dealer by someone other than ARCO ("Contract Dealers" sometimes referred to herein as "Independent Dealers").

7. EASTCO, Inc. ("EASTCO") is a subsidiary of ARCO.

8. EASTCO operates self-service stations marketing ARCO gasoline at four (4) locations in the Philadelphia area.

9. Atlantic sells gasoline motor fuel to Intermar under certain written contractual arrangements, known as Contract Dealer Agreements, at three locations operated by Intermar in the Philadelphia area: 80th & Ogontz Avenues, Philadelphia; Castor and Van Kirk Streets, Philadelphia; and 10 E. Germantown Pike, Norristown, Pennsylvania.

II.

The structure of gasoline marketing by ARCO in Philadelphia and its adjoining suburban area

10. ARCO also sells gasoline to 691 retail gasoline stations in the Philadelphia and Philadelphia suburban districts.

11. Of the 691 retail gasoline stations supplied gasoline by ARCO, 393 are owned by ARCO.

12. Of the 393 retail gasoline stations owned by ARCO, 389 are leased to persons other than EASTCO who are known as "lessee-dealers" and 4 are leased by EASTCO.

13. There are 298 retail gasoline stations supplied gasoline by ARCO which stations are not owned by ARCO. The operators of these stations are known as "independent dealers" or "contract dealers".

14. There are 374 ARCO retail gasoline stations in ARCO's Philadelphia district. Of these, 210 are lessee-dealers and 164 are independent dealers.

15. ARCO supplies gasoline in bulk to its lessee-dealers and its contract dealers, at the same price, which price is known as the "tank-wagon" price.

16. Based on the record before us, "very few" of the contract dealers and none of the lessee-dealers in the Philadelphia district discount the price of gasoline sold to the consumer.

17. Specifically, lessee-dealers pay a rental charge to ARCO in addition to the tank-wagon price of approximately 1.75 cents per gallon for the first 35,000 gallons purchased during a calendar month. For gasoline purchased in excess of 35,000 gallons, the rental charge is something less than 1.75 cents per gallon.

18. 80th and Ogontz and other contract dealers, pay to ARCO the tank-wagon price per gallon of gasoline. They each receive from ARCO payment of 1.5 or more cents for each gallon of gasoline purchased. This payment is known as the "effective discount".

19. The effective discount at 80th and Ogontz is 1.5 cents per gallon. (Exhibit P-2)

III.

The contract dealer agreements between ARCO and plaintiff

20. On June 30, 1972, Intermar made certain written agreements with Atlantic, effective September 1, 1972, for its 80th & Ogontz location. On June 30, 1972, Intermar made certain written agreements, effective July 1, 1972, for its Norristown location. On July 12, 1972, Intermar made certain written agreements with Atlantic, effective July 1, 1972, for its Castor and Van Kirk location.

21. The general provisions of these agreements were similar although there were specific terms as to monetary payments, gallonage to be bought and sold and the duration which varied at the different locations. In general, the agreements provided for an initial payment in the form of a loan by Atlantic to Intermar, referred to as "front money", for quarterly monetary payments by Atlantic to Intermar during the terms of the agreement, and for the purchase by Intermar from Atlantic of certain specific gallonage requirements.

22. The agreement between Intermar and Atlantic for the 80th & Ogontz location was for a term of September 1, 1972, to August 31, 1977, or until 6,000,000 gallons of motor fuel are delivered to Intermar whichever occurs last (Paragraph 3, Contract Dealer Agreement, Exhibit P-1). The agreement further provided that Intermar would purchase not less than 840,000 gallons of motor fuel annually and Intermar would not be required to purchase and Atlantic would not be required to deliver more than 1/8 of the annual gallonage in any one month. The agreement provided that "the times, manner and quantities of deliveries shall be in accordance with Atlantic's current practice in effect from time to time". (Paragraph 4, Contract Dealer Agreement, Exhibit P-1).

23. Prior to...