Malamud v. Sinclair Oil Corp.

• Decision Date: 19 August 1975
• Docket Number: No. 74-2268,74-2268
• Citation: 521 F.2d 1142
• Parties: 1975-2 Trade Cases 60,442 Jack MALAMUD et al., Plaintiffs-Appellees, v. SINCLAIR OIL CORPORATION et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1142

521 F.2d 1142

1975-2 Trade Cases 60,442

Jack MALAMUD et al., Plaintiffs-Appellees, v. SINCLAIR OIL CORPORATION et al., Defendants-Appellants.

No. 74-2268.

United States Court of Appeals Sixth Circuit.

Aug. 19, 1975.

George F. Karch, Jr., Thompson, Hine & Flory, Cleveland, Ohio, Helen H. Cutner, Philadelphia, Pa., for defendants-appellants.

Irving I. Saul, Dayton, Ohio, Earl W. Kintner, Eugene J. Meigher, Douglas G. Green, Washington, D.C., for plaintiffs-appellees.

Before PHILLIPS, Chief Judge, and CELEBREZZE and MILLER, Circuit Judges.

WILLIAM E. MILLER, Circuit Judge.

The defendants, Sinclair Oil Corporation, et al., (Sinclair) ¹ have filed this interlocutory appeal from the order of the district court partially denying Sinclair's motion for summary judgment. Pursuant to 28 U.S.C. § 1292(b), the district judge certified the question of plaintiffs' standing to maintain the action, and we granted permission for the appeal on September 26, 1974.

The plaintiffs in this case may be classified as follows: 1) the individual plaintiffs, 2) the petroleum distributing company, and 3) the three real estate investment companies. Specifically, the individual plaintiffs are Jack and Anne Malamud, the officers, directors, and sole shareholders of the four remaining corporate plaintiffs. These corporate entities are Malco Petroleum, Inc., the distributor, and Brentwood Corporation, Malco Corporation, ² and Tobyneil Corporation, the investment firms.

In 1965 Sinclair and Malco Petroleum, Inc., executed a distribution agreement under which Sinclair agreed to supply gasoline and other petroleum products to Malco for resale by it to retail customers over a three-year period. At the same time, the parties entered into an oral understanding whereby Sinclair agreed that it would provide financial assistance to the investment companies to aid their efforts to acquire and develop new service station properties for Sinclair. Within the next few months, Jack Malamud presented for Sinclair's approval a total of five possible acquisitions proposed by the investment companies, but Sinclair declined assistance in all the ventures. After Sinclair's disapproval of the acquisitions in early 1966, Jack Malamud began negotiations with Texaco, Inc., in the hope that he would be able to replace Sinclair as the supplier. After Malamud was able to negotiate a new contract with Texaco and to place a number of stations under it, he signed a distribution agreement with that company in August of 1966. Next, on behalf of Malco Petroleum, Malamud unsuccessfully sought an early termination of the contract with Sinclair. As a result, the contract ran its course and immediately after its termination on July 31, 1968, Malco Petroleum entered into a new distribution contract, covering all of its stations, with its present supplier, Texaco, Inc.

Subsequently, the plaintiffs instituted the pending action against Sinclair, alleging violations of Section 1 of the Sherman Act ³ and Section 3 of the Clayton Act ⁴ because of Sinclair's refusal to permit an early termination of the distribution contract and because of its failure to provide financing for expansion. ⁵ The district court described the plaintiffs' antitrust claims as follows:

The Malamuds and their corporations each claim substantial damage in that each has lost:

1. Profits from unrealized sales growth; and

2. The unrealized increase in going business value. All plaintiffs except Malco also claim damage from unrealized growth in real estate equity ownership.

Plaintiffs' theory of causation of damage is that because Sinclair refused to provide financial assistance to the investment companies for their efforts to expand, and because Sinclair would not terminate its contract with Malco, thereby freeing Malco to negotiate with other suppliers for the required financing agreement, the investment companies would have acquired more stations. Malco's claims to lost profits stem from unrealized sales to these prospective service stations. The Malamuds claim that their interests in these companies would have been enhanced but for Sinclair's adherence to its contractual rights.

Sinclair claimed in a motion for reconsideration of the district court's denial of its original motion for summary judgment that all of the plaintiffs lacked standing to sue because none of them had been directly injured by any alleged antitrust violation. In considering this challenge, the district court held that all the plaintiffs had standing, as defined in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970), in that they had alleged "injury in fact" and that "the interest sought to be protected . . . (was) arguably within the zone of interests to be protected . . . ." Id. at 152-53, 90 S.Ct. at 830. But as the lower court pointed out, relying on our decision in Volasco Products Co. v. Lloyd A. Fry Roofing Co., 308 F.2d 383 (6th Cir. 1962), "in a private anti-trust action, a plaintiff must prove an injury . . . to his business or property which bears a direct and causal relationship to the proven anti-trust violations." Turning to this issue, the court found from the pleadings as a matter of law that neither the individual plaintiffs nor the distributorship could possibly establish a sufficiently direct injury to make out an antitrust claim. ⁶ With regard to the investment companies, the court reasoned that there were mixed questions of law and fact relevant to the issue of directness of their alleged injury. "A prerequisite to a grant of summary judgment is that there be no genuine issue as to material fact and that the moving party be entitled to a judgment as a matter of law." Tee-Pak, Inc. v. St. Regis Paper Co., 491 F.2d 1193, 1195 (6th Cir. 1974). As this test was not satisfied, the district court correctly decided that summary judgment was inappropriate as to the investment companies. ⁷ The court subsequently certified for appeal the threshold question of the standing of these investment firms to sue.

The question of a party's standing to sue under Section 4 of the Clayton Act ⁸ has been and continues to be troublesome to the courts. The origin of the difficulty can be traced to the broad wording of the statute itself which provides in pertinent part that "(A )Ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue. . . ." (emphasis added). Despite this sweeping pronouncement, the courts have restricted the scope of the statute. "The lower courts have been virtually unanimous in concluding that Congress did not intend the antitrust laws to provide a remedy in damages for all injuries that might conceivably be traced to an antitrust violation." (citation omitted) Hawaii v. Standard Oil Co., 405 U.S. 251, n.14 at 263, 92 S.Ct. 885, at 891, 31 L.Ed.2d 184 (1972). One method used to limit the applicability of Section 4 has been to employ the standing doctrine as a screening device to deny plaintiffs access to the courts.

As a general proposition, the doctrine of standing is one aspect of the broader concept of justiciability. See Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 150, 71 S.Ct. 624, 95 L.Ed. 817 (1951) (Frankfurter, J., concurring). Justiciability is an analytical approach that has been "developed to identify appropriate occasions for judicial action, both as a matter of defining the limits of the judicial power created by Article III of the Constitution, and as a matter of justifying refusals to exercise the power even in cases within the reach of Article III." (footnote omitted) 13 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure, § 3529, at 146 (1975) (hereinafter cited as 13 Wright); Warth v. Seldin, --- U.S. ---, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). Article III, Section 2 of the Constitution establishes the boundaries for the limited jurisdiction of the federal courts. ⁹ However within these constitutional strictures, "(t)he Congress has considerable discretion in dealing with the jurisdiction of the lower federal courts." 13 Wright § 3526, at 108. Although the judicial power of the government is provided for in the Constitution, it remains for the Congress to allocate this power; to grant to or withhold from the federal courts jurisdiction in specific types of cases. See Palmore v. United States, 411 U.S. 389, 401, 93 S.Ct. 1670, 36 L.Ed.2d 342 (1973); See also Cary v. Curtis, 44 U.S. (3 How.) 236, 245, 11 L.Ed. 576 (1845). Justiciability, then, is a jurisdictional concept founded in part upon Article III and in part upon judicial discretion. See Barrows v. Jackson, 346 U.S. 249, 255, 73 S.Ct. 1031, 97 L.Ed. 1586 (1953). Standing is just one of several more specific categories derived from the general considerations of justiciability. ¹⁰

"The fundamental aspect of standing is that it focuses on the party seeking to get his complaint before a federal court and not on the issues he wishes to have adjudicated." Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968). Since standing refers to identifying the proper litigant in a suit, it is related but not identical to the concept of the real party in interest. The former doctrine usually applies to "public" suits and the latter to "private" ones. Hence, standing pertains to suits brought by individuals or groups challenging governmental action which has allegedly prejudiced their interests. On the other hand, the real party in interest question is raised in those much rarer instances between private parties where a plaintiff's interest is not easily discernible. See 13 Wright § 3531, at 176; Hasl, Standing Revisited The Aftermath of Data Processing, 18 St.L.U.L.J. 12 (1973). On account of this difference, the recent developments in the area of standing have taken place in the field of administrative law. See, e. g., United States v. SCRAP, 412 U.S. 669,...