McJunkin v. Richfield Oil Corporation

• Decision Date: 13 April 1940
• Docket Number: No. 21394W.,21394W.
• Citation: 33 F. Supp. 466
• Court: U.S. District Court — Northern District of California
• Parties: McJUNKIN v. RICHFIELD OIL CORPORATION et al.

33 F. Supp. 466

McJUNKIN v. RICHFIELD OIL CORPORATION et al.

No. 21394W.

District Court, N. D. California, S. D.

April 13, 1940.

John L. McNab and S. C. Wright, both of San Francisco, Cal., for plaintiff.

Pillsbury, Madison & Sutro, of San Francisco, Cal., for defendant Standard Oil Co.

Gregory, Hunt & Melvin, of San Francisco, Cal., and Robt. E. Paradise and Wm. J. DeMartini, both of Los Angeles, Cal., for defendant Richfield Oil Co.

Hanna & Morton and James M. McRoberts, all of Los Angeles, Cal., for defendant Hayes Jenkins Investment Co.

WELSH, District Judge.

Motions to dismiss this action and for more definite statement and bill of particulars have been severally interposed by the three defendant corporations, Richfield Oil Corporation, Standard Oil Company of California and Hayes Jenkins Investment Company. Defendants, Richfield Oil Corporation and Standard Oil Company of California, have also each presented motions to strike out certain allegations of the complaint. These several motions will be disposed of in the order referred to above.

The motions to dismiss this action are based on an alleged failure of the complaint to state a claim upon which relief can be granted.

The complaint is based on a claimed violation of Section 1 of the Sherman Anti-Trust Act of July 2, 1890, 15 U.S.C.A. § 1, resulting in injury to the plaintiff's business and entitling him, by virtue of Section 7 of the Sherman Act, 15 U.S.C.A. § 15, to recover damages for his injuries. The pertinent portions of the two sections of the Sherman Act involved in this action read as follows:

"Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. * * *"

"Section 7. Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefor * * * and shall recover three fold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee."

It appears from the clear language of the above provisions of the Sherman Act and from the interpretation and application which have been given them by the federal courts, that to state a claim upon which relief may be granted to the plaintiff herein, his complaint must show a direct restraint on interstate commerce in pursuance of a contract, combination or conspiracy designed to effectuate that purpose and proximately resulting in special injury to his business or property, as distinguished from any injury resulting therefrom to the public generally. Blumenstock Bros. Advertising Agency v. Curtis Pub. Co., 252 U.S. 436, 40 S.Ct. 385, 64 L.Ed. 649; Abouaf v. J. D. & A. B. Spreckels Co., D.C.N.D.Cal., 26 F.Supp. 830.

If the complaint shows these facts, it states a cause of action and it is immaterial that plaintiff's business which is injured by the conspiracy and resulting restraint of trade be itself a purely local intrastate enterprise. City of Atlanta v. Chattanooga Foundry & Pipeworks et al., 6 Cir., 127 F. 23, 64 L.R.A. 721.

It is also immaterial that but a single interstate transaction is involved in the restraint. Steers v. United States, 6 Cir., 192 F. 1.

But a cause of action is not stated under the foregoing provisions of the Sherman Act unless the complaint shows a contract, combination or conspiracy directed to and actually operating as a restraint on interstate trade or commerce to the plaintiff's proximate damage.

With the foregoing principles in mind, the material allegations of the complaint will be examined. The complaint alleges that the petitioner is engaged in interstate commerce; that the defendants, Richfield Oil Corporation and Standard Oil Company of California, are each engaged in interstate commerce; that the petitioner operates a service station at Berkeley, California. Paragraph IX of the complaint alleges that: "Petitioner is informed and believes and upon such information and belief alleges the facts to be that respondents, and other persons unknown to petitioner are and at all times mentioned in this petition have been engaged in a conspiracy to regulate, control and manipulate the prices of petroleum products for their mutual benefit and in violation of the Act of July 2nd, 1890, known as the `Sherman Act'."

The complaint then goes on to allege the making of an oral agreement between petitioner and defendant, Richfield Oil Corporation, for the sale and delivery of gasoline to petitioner on certain stated terms; that a written agreement was signed by the parties to the oral understanding which contained different terms from those orally agreed on; that this written agreement was signed by petitioner on the assurance that the same was to be used only for the protection of Richfield Oil Corporation in some internal arrangement between that corporation and Standard Oil Company of California which did not concern petitioner; that the gasoline was supplied petitioner by Richfield Oil Corporation pursuant to the terms of the oral agreement from June 1, 1938, to October 5, 1938. Paragraph XIX then alleges that: "* * * on or about the 5th day of October, 1938, in the City of Berkeley, State of California, the respondents in violation of Sections I, II and VII of an Act of Congress of the United States approved July 2nd, 1890 15 U.S.C.A. §§ 1, 2, 15 known as the `Sherman Act', and the Act of Congress of October 15, 1914, Chap. 323, Section 4, 15 U.S.C.A. § 15 wilfully wrongfully and unlawfully, and in restraint of trade combined, confederated and agreed together to injure and damage petitioner in his business as aforesaid by having the respondent, Richfield Oil Corporation, refuse to longer supply to petitioner, gasoline and lubricating oils as said last named respondent had agreed to do, and to cancel said written sales contract and all contracts between petitioner and said respondent, Richfield Oil Corporation."

The complaint then alleges that in furtherance of said conspiracy, the defendant Richfield Oil Corporation, on October 5, 1938, served notice on petitioner cancelling the written agreement signed by petitioner and has ever since refused to sell gasoline to petitioner. The remaining allegations of the complaint are directed to the resulting injury to plaintiff.

It will be noted that the complaint fails to allege any combination or conspiracy having as its object the restraint either of interstate trade or commerce in general, or the restraint of any interstate transaction in which plaintiff was an interested party. Nor are any facts alleged showing any such restraint. The most that is alleged in the complaint is a conspiracy designed and operating to prevent the sale and delivery, under a contract, of gasoline to petitioner at his service station located in this state, by Richfield Oil Corporation, a resident of this state. So far as appears from the complaint, the restraint complained of was directed to a purely local, intrastate movement of gasoline. At least, it does not affirmatively appear from the complaint that the sale and delivery of gasoline to petitioner which was allegedly interfered with by the concerted acts of the defendants, involved any movement of gasoline in interstate commerce as an integral part thereof. That the agreement for the sale and delivery of the gasoline may have indirectly caused a movement in interstate commerce is, under the decisions, not enough to constitute the sale and delivery under the agreement an interstate transaction. Lipson v. Socony-Vacuum Corporation, 1 Cir., 76 F.2d 213; Foster & Kleiser Co. v. Special Site Sign Co., 9 Cir., 85 F.2d 742.

That the alleged conspiracy of the defendants to control the prices of petroleum products might have been directed to the control of the prices of such products in interstate as well as intrastate commerce would not avail plaintiff anything in this action under the...