Midwest Petroleum Co. v. US Dept. of Energy, 8-16.

• Decision Date: 25 March 1985
• Docket Number: No. 8-16.,8-16.
• Citation: 760 F.2d 287
• Parties: MIDWEST PETROLEUM CO., Oliver Doerflinger Oil Co., Inc., Joe Rayl, Inc., Saveway Oil Co., McLeroy Oil Co. of Independence, Inc., Malone Oil Co., Sunglo, Inc., Palmer Oil Co., Dal-Rich Oil Company, Carr Oil Co., Inc., Tommy Gage Oil Co., Felts Company, Inc., Hooper Oil Co., Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF ENERGY, Donald Hodel, Secretary, United States Department of Energy, and Milton C. Lorenz, Special Counsel for the United States Department of Energy, American Petrofina Company, Inc., Defendants-Appellees.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

760 F.2d 287

MIDWEST PETROLEUM CO., Oliver Doerflinger Oil Co., Inc., Joe Rayl, Inc., Saveway Oil Co., McLeroy Oil Co. of Independence, Inc., Malone Oil Co., Sunglo, Inc., Palmer Oil Co., Dal-Rich Oil Company, Carr Oil Co., Inc., Tommy Gage Oil Co., Felts Company, Inc., Hooper Oil Co., Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF ENERGY, Donald Hodel, Secretary, United States Department of Energy, and Milton C. Lorenz, Special Counsel for the United States Department of Energy, American Petrofina Company, Inc., Defendants-Appellees.

No. 8-16.

Temporary Emergency Court of Appeals.

Argued January 26, 1985.

Decided March 25, 1985.

Donald H. Grissom, Austin, Texas, for plaintiffs-appellants.

Richard Greenberg, U.S. Dept. of Justice, Civ. Div., Washington, D.C., argued, with whom on brief were Stephen E. Hart, Charles E. Davidow, of Wilmer, Cutler & Pickering, argued for American Petrofina, with whom on brief was Jay F. Lapin, of the same firm.

Before JAMESON, GRANT and PECK, Judges.

JOHN W. PECK, Judge.

This case is before the court upon an appeal from the order of the district court granting Appellees' motions to dismiss, or in the alternative, for summary judgment. Appellants are independent jobber-marketers and purchaser-resellers of various petroleum products. Appellee American Petrofina, Inc. ("Fina"), a producer and refiner of crude oil, purportedly sold its product to each of the Appellants during the period 1974-81. During this period, Fina was subject to a Department of Energy ("DOE") audit regarding Fina's compliance with the mandatory allocation and price regulations promulgated under the Emergency Petroleum Allocation Act of 1973, 15 U.S.C. § 751, et seq. (EPAA). In January 1981, DOE issued 7 Notices of Probable Violations (NOPV's) to Fina. The NOPV's identified possible overcharges in sales of products throughout the period 1973-79. DOE and Fina agreed to enter into a comprehensive settlement. Without any finding that Fina was in fact liable for any overcharges, DOE and Fina agreed to the Consent Order at issue in this case. The Consent Order was executed on March 2, 1982. Under the proposed Consent Order, Fina would pay $14 million on a pro rata basis to its customers that had purchased motor gasoline in 1974.

Notice of the proposed Consent Order, published for comment in the Federal Register on March 8, 1982, provided in part:

While a number of challenges to Fina's application of the regulations resulted from this audit, DOE has no reason to believe, based upon the intensified audit which preceded the agreement to enter into this Consent Order, that Fina would be liable for overcharges in sales of petroleum products after 1974. However, it was DOE's preliminary view that overcharges were identified in calendar year 1974.

The substance of this statement was contained in a press release and correspondence sent to Appellants by Fina. The Consent Order stated in part:

during the course of the audit of Fina, DOE considered numerous questions and took various informal and formal administrative actions, including the issuance of issue letters, Notices of Probable Violations (NOPV's) and a Notice of Proposed Disallowance (NOPD).

Notice of adoption of the order by DOE, published in the Federal Register on May 14, 1982, provided in part:

Claimants who do not believe that the settlement offered adequately satisfies their claims need not accept the offer and are free to pursue their claims in a private action against the company.... The DOE believes that the remedies set forth in the Consent Order adequately resolves issues of Fina's compliance with the allocation and price regulations. Therefore, the funds generated by the Consent Order must be considered in settlement of all claims. This position is fully consistent with the scope of the Consent Order. Moreover, as discussed above, Claimants may reject the offer contained in the Consent Order and pursue their own private right of action.

Each of the Appellants in this action accepted the settlement, signed a release giving up its right to sue separately for alleged overcharges, and received its share of the $14 million. The release reached every action against Fina "arising out of or under Section 210 of the Economic Stabilization Act or the federal petroleum price and allocation regulations" based on any "act, matter, case, statement, conduct, practice or thing whatever made, done or omitted by Fina up to the date hereof...."

In September 1983, Appellants filed the present action seeking to rescind their releases and to recover alleged overcharges for the period after 1974. They alleged that the Consent Order's provision for such releases was unlawful and should be set aside and that they were induced to sign the releases by a fraudulent misrepresentation in the Federal Register notice of March 8, 1982.

The district court held that Appellants lacked standing to challenge the validity of the Consent Order and also dismissed the claim of fraud. The court granted Appellees' motions to dismiss, or alternatively, for summary judgment. For the reasons set forth below, we affirm.

I. STANDING

Appellants argue that DOE exceeded its authority by entering into a consent order which permitted Fina to condition the payment of the settlement funds to Appellants upon their release of Fina from liability. First, they argue that DOE has a mandatory duty to make unconditional restitution to overcharged parties from consent order monies at the time an order is executed. Second, they assert that the Consent Order improperly commingles administrative and private remedies provided, respectively, under § 209 and § 210 of the Economic Stabilization Act.¹

To establish standing, appellants must demonstrate that they have "`such a personal stake in the outcome of the controversy' as to warrant their invocation of federal-court jurisdiction and to justify exercise of the court's remedial powers on their behalf." Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975). In Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976), the Supreme Court stated that "the relevant inquiry is whether, assuming justiciability of the claim, the plaintiff has shown an injury to himself that is likely to be redressed by a favorable decision."

The district court, in finding that Appellants lacked standing to challenge the validity of the Consent Order entered into between DOE and Fina, relied upon U.S. Oil Company v. Department of Energy, 510 F.Supp. 910 (E.D.Wis.1981). In that case, three independent gasoline marketers, customers of Koch Refinery, brought an action against DOE and Koch, inter alia, seeking declaratory and injunctive relief against DOE to prevent the entry of a proposed consent order between DOE and Koch. Plaintiffs alleged that DOE had violated its own regulations, that the remedial actions provided for in the Consent Order were insufficient, and that DOE had abused its discretion in exempting Koch from a record keeping requirement. The court concluded that the plaintiffs lacked standing to challenge the proposed order because they had shown no injury to themselves.

The district court concluded that the same rationale applied to the present case. The court stated:

At the time the Consent Order was signed, plaintiffs were not in any way restricted from bringing their own civil action against Fina under Section 210.¹ The terms of the Consent Order provided them with an alternative option for recovery of alleged overcharges, but did not purport to substitute this option for other available remedies. The mere fact that the option was not as favorable to plaintiffs as they would have wished (e.g., permitting payment without release of liability), does not mean that they suffered any loss as a result of the Consent Order. The result was still a net gain for the plaintiffs. (Emphasis in original.)

In footnote 1, which accompanies the above-quoted text, the court wrote:

1. Obviously, plaintiffs' rights to bring a Section 210 action are restricted voluntarily by plaintiffs in return for benefits received under the settlement. Since it was not the Consent Order itself that caused the injury, plaintiffs have no standing to challenge the validity of its terms.

Appellants contend that Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975), is controlling on the issue of standing. In Blue Chip Stamps, the Supreme Court found that the plaintiffs lacked standing to sue for a 10b-5 violation because they had not purchased any of the stock offered for sale pursuant to the terms of a consent decree. Appellants note that the plaintiffs in Blue Chip Stamps lacked standing because they did not actually purchase any of the offered stock. Appellants, on the other hand, actually executed a release in favor of Fina and participated in the distribution of the...