McGuire Oil Co. v. Mapco Petroleum, Inc., Civ. A. No. 85-0378-AH.
| Decision Date | 05 March 1991 |
| Docket Number | Civ. A. No. 85-0378-AH. |
| Citation | 763 F. Supp. 1103 |
| Parties | McGUIRE OIL COMPANY, et al., Plaintiffs, v. MAPCO PETROLEUM, INC., et. al., Defendants. |
| Court | U.S. District Court — Southern District of Alabama |
Denis Summers, Ezra Jones III and Richard O'Donnell of Summers, Jones & O'Donnell, Atlanta, Ga., David Conrad, Mobile, Ala., for plaintiffs.
J.P. Courtney, III, of Lyons, Pipes & Cook, Mobile, Ala., for defendants.
The plaintiffs brought suit against the defendant, Mapco Petroleum Inc, and its parent company, Mapco, Inc. ("Mapco") seeking damages and injunctive relief for selling gasoline at prices below costs in violation of the Alabama Motor Fuel Marketing Act ("AMFMA"), Ala.Code § 8-22-1, et seq. Mapco counterclaimed against the plaintiffs for allegedly conspiring to fix prices in violation of sections one and two of the Sherman Act and the AMFMA.
Mapco has moved for summary judgment on several grounds. First, Mapco argues that the plaintiffs have failed to establish three essential elements of the AMFMA — 1) that Mapco had the requisite intent to substantially lessen or destroy competition; 2) that Mapco's below-cost sales had an injurious effect on competition; and 3) that the plaintiffs suffered any antitrust injury.
Mapco also contends that the AMFMA conflicts with general and specific policies of the federal antitrust laws and therefore is pre-empted. Finally, Mapco asserts the "good faith meeting competition" defense provided for in section 8-22-8(b) of the AMFMA as a complete defense against the plaintiffs' claims. The plaintiffs have moved for partial summary judgment on this issue on the grounds that a defendant who prices gasoline one or two cents below cost is not entitled to the meeting competition defense as a matter of law. The plaintiffs also have moved for summary judgment on Mapco's counterclaims on the grounds that Mapco lacks standing to bring suit under the Sherman Act and the AMFMA.
1. The defendant Mapco is an independent oil company that sells only unbranded gasoline at three to four retail locations in Mobile, Alabama. (Joint Pretrial Order).
2. The plaintiff McGuire Oil Company ("McGuire") is a petroleum wholesaler primarily involved in the sale of branded gasoline to retail outlets in the State of Alabama. (Joint Pretrial Order).
3. The plaintiff Berwick Bay Oil Company is a petroleum jobber engaged in both the wholesale and retail sale of branded gasoline in Mobile County, Alabama. (Joint Pretrial Order).
4. The plaintiff Diamond Gasoline Stations, Inc. ("Diamond") primarily retails unbranded gasoline in Mobile County, Alabama. (Joint Pretrial Order).
5. Mapco's primary pricing policy has been to "match" the retail prices of other independents. At times, Mapco has sold its gasoline at a price one or two cents below the prices offered by branded gasoline retailers. (Depo. of James Alligood at 25).
6. There are approximately 400 retail gasoline outlets in Mobile County, Alabama. (Joint Pretrial Order).
7. The plaintiffs allege in their amended complaint that Mapco has violated the AMFMA by unlawfully retailing gasoline at prices "below cost" from January 1, 1985 until the present.
8. Mapco contends that it has a complete defense in the "meeting competition" defense of the AMFMA. Ala.Code § 8-22-8(b).
9. Mapco alleges in its counterclaim that the plaintiffs have conspired to fix prices in violation of sections one and two of the Sherman Act.
10. The plaintiffs contend that Mapco has not suffered any antitrust injury and therefore lacks standing to bring suit under the Sherman Act and the AMFMA.
1. Jurisdiction is properly before this Court pursuant to 28 U.S.C. § 1332.
2. Federal Rule of Civil Procedure 56 provides that summary judgment shall be granted:
if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
Summary judgment is appropriate "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, ... on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
3. The intent of the Alabama legislature in enacting the AMFMA is to encourage fair and honest competition and to safeguard the public against the creation of monopolies or unfair methods of competition in transactions involving the sale of motor fuel in the wholesale or retail trades in Alabama and to prohibit the advertising or offering for sale of motor fuel below cost or at a cost lower than charged other persons on the same marketing level with the intent of injuring competitors or destroying or substantially lessening competition. Ala.Code § 8-22-3.
4. Intent to injure competition is not an essential element of a plaintiff's prima facie case under the AMFMA. State Ex Rel. Galanos v. Mapco Petroleum, 519 So.2d 1275 (Ala.1987).
5. A plaintiff bringing suit under the AMFMA must show both a sale below cost and an injurious effect on competition. Mapco Petroleum, 519 So.2d 1275.
6. Pre-emption of state laws are not favored in the absence of persuasive reasons.
7. To proceed under the federal antitrust laws and the AMFMA, a private plaintiff must first show that he has suffered "injury of the type the antitrust laws were designed to prevent and that flows from that which makes the defendant's act unlawful." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977).
DISCUSSION
(1) Intent:
Mapco contends the plaintiffs have failed to establish certain essential elements of their prima facie case under the AMFMA. Relying on MaGahee v. Northern Propane Gas Co., 858 F.2d 1487 (11th Cir.1988), Mapco first argues that the plaintiffs have failed to show that Mapco possessed the requisite intent to substantially injure or destroy competition. In that case, the plaintiff brought suit under section two of the Sherman Act for the defendant's alleged predatory pricing. The Eleventh Circuit stated "to withstand judgment as a matter of law, a plaintiff must have other evidence, either objective or subjective, of predatory intent." Id. at 1503. (citations omitted).
§ 8-22-3 (emphasis added).
Nevertheless, there is no mention of an intent requirement in section 8-22-6, the substantive section of the AMFMA. This section provides:
It shall be unlawful for any person engaged in commerce in this state to sell or offer to sell motor fuel below cost or to sell or offer to sell it at a price lower than the seller charges other persons on the same day and on the same level of distribution, within the same market area, where the effect is to injure competition.
Ala.Code § 8-22-6.
The Alabama Supreme Court resolved this ambiguity in State Ex Rel. Galanos v. Mapco Petroleum, 519 So.2d 1275 (Ala. 1987). There, the Court held that predatory intent is not an essential element of a plaintiff's prima facie case under the AMFMA despite the language of section 8-22-3. Instead, the Court determined that a plaintiff "proves a prima facie case when it proves a sale below cost and an injurious effect on competition ..." Id. at 1286 (emphasis added). Accordingly, the plaintiffs' failure to show that Mapco possessed the intent to substantially injure or destroy competition is not grounds for summary judgment and Mapco's motion for summary judgment is therefore DENIED.
(2) Pre-emption:
Mapco argues, alternatively, that if evidence of intent is not required under the AMFMA, it is inconsistent with MaGahee and thus preempted by federal law. To decide this issue, the Court must start from the premise that "pre-emption of state law by federal statute or regulation is not favored in the absence of persuasive reasons —either that the nature of the regulated matter permits no other conclusion, or that the Congress has unmistakably so ordained." Chicago & N. Western Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 317, 101 S.Ct. 1124, 1130, 67 L.Ed.2d 258 (1981), quoting Florida Lime & Avocado Growers Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963).
To be sure, the Supreme Court has noted that instances of predatory pricing are rare. Accordingly, the Court has voiced concern over deterring pro-competitive behavior if inferences of predatory conduct are allowed to be easily drawn. See Matsushita Elect. Indust. Co., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Thus, Mapco maintains that by not requiring evidence of predatory intent, the AMFMA "allows plaintiffs to brings claims barred by federal law as improperly curtailing...
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