Liquilux Gas Services of Ponce, Inc. v. Tropical Gas Company

• Citation: 303 F. Supp. 414
• Decision Date: 10 September 1969
• Docket Number: Civ. A. No. 32-61.
• Parties: LIQUILUX GAS SERVICES OF PONCE, INC., et al., Plaintiffs, v. TROPICAL GAS COMPANY, Inc., et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

303 F. Supp. 414

LIQUILUX GAS SERVICES OF PONCE, INC., et al., Plaintiffs, v. TROPICAL GAS COMPANY, Inc., et al., Defendants.

Civ. A. No. 32-61.

United States District Court D. Puerto Rico.

September 10, 1969.

Patrick Wilson, Ponce, P. R., for plaintiffs.

Arturo Estrella, San Juan, P. R., for defendants Baragaño, Trías, Saldaña and Francis.

MEMORANDUM OPINION

CANCIO, Chief Judge.

Defendant Tropical Gas Company, Inc. ("Tropigas") moved to dismiss Counts I and II of the Amended and Supplemental Complaint pursuant to Rules 12(b) (1), 12(b) (6) and 12(h) (3) of the Federal Rules of Civil Procedure. The grounds for the motion, which are discussed more fully below, are that this Court lacks jurisdiction over the subject matter of these Counts and that these Counts fail to state claims upon which relief may be granted. Tropigas has also moved to strike from Count III of the Amended and Supplemental Complaint paragraphs 26(J) and 26(K) thereof, which in substance simply restate and incorporate by reference the allegations of Counts 1 and II.

Tropigas' defenses to Counts I and II concededly raise no issues of fact, and accordingly are appropriate for consideration at this time.

Counts I and II of the Amended and Supplemental Complaint purport to state claims for relief based upon alleged discriminations in price and services or facilities by defendant Tropigas, in violation of Sections 2(a) and 2(e) of the Clayton Act, as amended, 15 U.S.C. §§ 13(a), 13(e).¹ Specifically, it is alleged in paragraph 15 of Count I that Tropigas sold liquified petroleum gas ("LPG") to plaintiff Gas Ideal, Inc., at a price of 12½ cents per gallon, f. o. b. the Commonwealth Oil Refining Company facility at Guayanilla Bay, Puerto Rico, while at the same time selling a like grade and quality of LPG to Porto Rico Gas and Coke Company ("PRGC"), a regulated public utility located in San Juan, Puerto Rico, at a delivered price of 11 7/8 cents per gallon. It is also alleged that Tropigas sold LPG "to other purchasers throughout Puerto Rico" on terms that discriminated against plaintiffs.

In paragraph 21 of Count II it is alleged that Tropigas discriminated against plaintiffs in favor of PRGC by installing and maintaining storage tanks "for the benefit of" PRGC, while not offering similar services to plaintiff.

In paragraphs 26(J) and 26(K) of Count III it is alleged that the unlawful discriminations alleged in Counts I and II were part of an attempt by Tropigas to monopolize the LPG business in Puerto Rico. The basic allegations of Count III allege violations of Sections 1, 2 and 3 of the Sherman Act and are not affected by Tropigas' present motion.

Tropigas' motion raises the question whether the Robinson-Patman Act presently has greater applicability within the Commonwealth of Puerto Rico than it does in a state. Defendant's contention is that the Robinson-Patman Act has no greater applicability in Puerto Rico than in a state and that therefore, under governing decisions interpreting the scope of the Robinson-Patman Act, the Court has no jurisdiction to grant relief on Counts I and II of the Amended and Supplemental Complaint.

Any finding that a party has unlawfully discriminated in price, services or facilities, in violation of Sections 2(a) and 2(e) of the Robinson-Patman Act, requires that at least one of the transactions forming the basis of the alleged discrimination be "in commerce." The term "commerce" is defined in Section 1 of the Clayton Act, 15 U.S.C. § 12, to mean, inter alia, trade or commerce among the several states, "or within * * * any Territory or any insular possession or other place under the jurisdiction of the United States." (Emphasis added.) Robinson-Patman cases arising in the mainland United States have made it clear that in order to satisfy the "in commerce" requirement of the Act, at least one of the transactions on which the discrimination is based must have crossed a state boundary. However, because a transaction within a territory or insular possession is, by definition, "in commerce," it may be presumed that the requirement of showing that a transaction crossed a boundary does not apply in the case of a territory or possession. In such a case a claim of unlawful discrimination can be based upon sales solely within the territory or possession.

Puerto Rico became a Commonwealth in 1952 following the adoption of a compact between the United States and the people of Puerto Rico. Section 9 of the Puerto Rican Federal Relations Act, 48 U.S.C. § 734, provides that:

the statutory laws of the United States not locally inapplicable, except as hereinbefore or hereinafter otherwise provided, shall have the same force and effect in Puerto Rico as in the United States * * *.

Thus the specific question raised by this motion is whether the Robinson-Patman Act is presently to apply in Puerto Rico in the same manner as it applies in a state or whether it should be given greater applicability in Puerto Rico and apply as if Puerto Rico were still a territory or insular possession of the United States.

All of the transactions alleged in the Amended and Supplemental Complaint took place subsequent to 1952. If the Act is held to apply in the same manner as it applies to a state, plaintiffs must plead and prove that at least one of the transactions upon which the alleged violations of the Act are premised crossed the boundary of Puerto Rico. Inasmuch as Counts I and II of the Complaint plead transactions solely within Puerto Rico, and plaintiffs so concede, these Counts must be dismissed under such a holding. On the other hand, if Puerto Rico is held still to be a "territory or insular possession" under the Clayton Act definition of "commerce," the transactions alleged in the Complaint would be "in commerce," and the Robinson-Patman Act would have greater applicability in Puerto Rico than in a state.

Defendant's motion does not raise the broader question whether the Robinson-Patman Act applies to Puerto Rico. The Court assumes that this statute applies to a price discrimination involving Puerto Rico in any case where at least one of the transactions upon which the alleged violation is based is "in commerce." In short, the only issue presented on this motion is the present meaning of the words "in commerce" insofar as transactions wholly within Puerto Rico are concerned.²

A number of cases decided under the Act makes it clear beyond argument that a Robinson-Patman violation cannot be proved on the basis of transactions occurring solely within a single state. See, e. g., Hiram Walker, Inc. v. A&S Tropical, Inc., 407 F.2d 4 (5th Cir. 1969); Borden Co. v. FTC, 339 F.2d 953 (7th Cir. 1964); Jones v. Metzger Dairies, Inc., 334 F.2d 919 (5th Cir. 1964); Willard Dairy Corp. v. National Dairy Products Corp., 309 F.2d 943 (6th Cir. 1962), cert. denied, 373 U.S. 934, 83 S.Ct. 1554, 10 L.Ed.2d 691 (1963); Central Ice Cream Co. v. Golden Rod Ice Cream Co., 287 F.2d 265 (7th Cir. 1961), cert. denied, 368 U.S. 829, 82 S.Ct. 50, 7 L.Ed.2d 32 (1961); Atlas Bldg. Products Co. v. Diamond Block & Gravel Co., 269 F.2d 950 (10th Cir. 1959), cert. denied, 363 U.S. 843, 80 S.Ct. 1608, 4 L.Ed.2d 1727 (1960); Gaylord Shops, Inc. v. Pittsburgh Miracle Mile Town & Country Shopping Center, Inc., 219 F.Supp. 400 (W.D.Pa.1963); Massachusetts Brewers Ass'n v. P. Ballantine & Sons Co., 129 F.Supp. 736 (D. Mass.1955); Myers v. Shell Oil Co., 96 F.Supp. 670 (S.D.Cal.1951); Sun Cosmetic Shoppe v. Elizabeth Arden Sales Corp., 81 F.Supp. 547 (S.D.N.Y.1948), reversed on other grounds, 178 F.2d 150, 13 A.L.R.2d 358 (2d Cir. 1949); Lewis v. Shell Oil Co., 50 F.Supp. 547 (N.D. Ill.1943).

It is thus amply clear that if the Robinson-Patman Act is to apply in Puerto Rico in the same manner and with the same effect as it applies within a state, the Act is not violated unless at least one of the transactions involved crossed the boundaries of Puerto Rico. Transactions solely within Puerto Rico, such as those in this case, do not provide the basis for a violation.

As this Court recently noted in another case involving the applicability of federal antitrust laws in Puerto Rico, it is not necessary in this case "to delve into the question of the political status of Puerto Rico as a Commonwealth." David Cabrera, Inc. v. Unión de Choferes y Dueños, 256 F.Supp. 839, 842 (D.P.R. 1966). All that is called for here is an application of section 9 of the Puerto Rican Federal Relations Act.

It may be assumed that prior to 1952, the Robinson-Patman Act applied to transactions solely within Puerto Rico. Congress had defined the term "commerce" in Section 1 of the Clayton Act to include trade within any "territory or insular possession" of the United States, and cases decided during this period indicated that when Congress used such language in defining the scope of a statute it intended to exhaust its plenary power to legislate with respect to the subject matter of the statute concerned. See Puerto Rico v. Shell Co. (P.R.), Ltd., 302 U.S. 253, 259, 58 S.Ct. 167, 82 L.Ed. 235 (1937); Cases v. United States, 131 F.2d 916, 923 (1st Cir. 1942), cert. denied sub nom. Velázquez v. United States, 319 U.S. 770, 63 S.Ct. 1431, 87 L.Ed. 1718 (1943); cf. Atlantic Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 52 S. Ct. 607, 76 L.Ed. 1204 (1932).

Thus, because any transaction in Puerto Rico was in "commerce", within the definition of the Clayton Act, it would follow that in the days prior to Commonwealth status the requirement of the Robinson-Patman Act that at least one transaction in an alleged price discrimination be "in commerce" was automatically satisfied.

However, since the attainment of Commonwealth status by Puerto Rico in 1952, and the adoption by the Puerto Rican people of their own Constitution, it has been consistently held that Puerto Rico must be viewed in the same manner as a state for the purpose of determining whether the "commerce" requirement of a...