Panotex Pipe Line Co. v. Phillips Petroleum Co., 71-1335.

• Decision Date: 17 February 1972
• Docket Number: No. 71-1335.,71-1335.
• Citation: 457 F.2d 1279
• Parties: PANOTEX PIPE LINE COMPANY et al., Plaintiffs-Appellants, v. PHILLIPS PETROLEUM COMPANY and Diamond Shamrock Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

457 F.2d 1279 (1972)

PANOTEX PIPE LINE COMPANY et al., Plaintiffs-Appellants, v. PHILLIPS PETROLEUM COMPANY and Diamond Shamrock Corporation, Defendants-Appellees.

No. 71-1335.

United States Court of Appeals, Fifth Circuit.

February 17, 1972.

COPYRIGHT MATERIAL OMITTED

Urban A. Lester, Peyton Ford, Samuel K. Abrams, Lester, Rothwell & Contrucci, Ford, Ayer & Horan, Washington, D. C., for plaintiffs-appellants; Robert L. Templeton, Amarillo, Tex., Leonard J. Emmerglick, Roger W. Langsdorf, Morison, Murphy, Abrams & Haddock, Irving R. M. Panzer, Washington, D. C., of counsel.

H. A. Berry, W. M. Sutton, A. W. So-Relle, III, W. E. Notestein, Underwood, Wilson, Sutton, Heare & Berry, Amarillo, Tex., for defendant-appellee, Diamond Shamrock Corp.

C. J. Roberts, Morris Harrell, Stan McMurry, Dallas, Tex., Lloyd G. Minter, Kenneth Heady, Bartlesville, Okl., Rain, Harrell, Emery, Young & Doke, Dallas, Tex., for defendant-appellee, Phillips Petroleum Co.

Before BELL, AINSWORTH and GODBOLD, Circuit Judges.

BELL, Circuit Judge:

This appeal arises out of an antitrust litigation. The district court directed verdicts for the defendants. We affirm.

Cameron and its pipeline subsidiary, Panotex, claimed damages jointly and severally against Phillips and Shamrock, alleging a conspiracy between them, and also a conspiracy between each of them and their respective subsidiaries, Phillips Pipe Line Company and Shamrock Pipe Line Corporation. The gist of the complaint was a conspiracy, as stated, to restrain and monopolize, and to attempt to monopolize interstate commerce in the purchase and transportation of crude oil in designated areas in violation of §§ 1 and 2 of the Sherman Act. 15 U.S.C.A. §§ 1 and 2. The cause of action also alleged individual conduct on the part of Phillips and Shamrock in violation of the same statutes. The prayer was for damages and injunctive relief under §§ 4 and 16 of the Clayon Act. 15 U.S.C.A. §§ 15 and 26. The complaint and the evidence introduced in support thereof bottoms out as a claim that defendants attempted to foreclose a competitor, and having failed in that, to thereafter restrict the competitor.

The cause was tried to a jury. Motions for directed verdicts filed by Phillips and Shamrock were denied by the district court at the close of plaintiffs' case. Defendant Phillips then proceeded to put on its defense. Shamrock put in a part of its evidence through cross-examination of witnesses for Phillips. After two days of defense evidence, the court suggested, sua sponte, that Shamrock again move for a directed verdict. Shamrock so moved and the motion was granted. Phillips then asked for the same relief and its motion was granted. Counterclaims against Cameron and Panotex were severed and are not a part of this appeal.

There are three assignments of error. First, plaintiffs urge that it was prejudicial procedural error to grant motions for directed verdicts in the middle of defendants' cases, i. e., at a random time during the trial. The contention is that a directed verdict may be granted under Rule 50, F.R.Civ.P., only after the opening statement of opposing counsel, at the close of the evidence offered by an opponent, or at the close of all of the evidence, citing 5A Moore's Federal Practice, par. 50.04. Plaintiffs also assign error on a substantive basis in the granting of directed verdicts, urging that the evidence was sufficient to make a jury question. Lastly, error is asserted on the basis of the exclusion of certain items of evidence offered by plaintiffs.

The facts will be detailed in connection with the discussion of the alleged substantive error in directing verdicts for defendants. We proceed first to a discussion of the claimed procedural error.

I.

The motions for directed verdict were granted during the presentation of the defense testimony. There was extensive colloquy between the court and counsel. The posture of the case at the time was somewhat complex in that the counterclaims of each defendant based on alleged antitrust violations by plaintiffs were being tried to the same jury. Plaintiffs' proof was voluminous and the court indicated that it had reviewed all of the testimony to date and was inclined to reconsider the motion of Shamrock for a directed verdict, and also to sever Shamrock's counterclaim. (This was the previously overruled motion for directed verdict.) The court then ruled as indicated for Shamrock. At that point, plaintiffs joined with Phillips in moving for a mistrial because of the hiatus and confusion left in the proof as to liability and damages due to the removal of Shamrock. Phillips had moved for a directed verdict following the grant of Shamrock's motion but this motion was overruled. Following the joint motion for mistrial, the court reconsidered and granted Phillips' motion for directed verdict and also severed its counterclaim.

At no time during the proceeding did plaintiffs offer any objection whatever to the timing of the directed verdicts. Moreover, nothing was said during the proceeding which pointed to any prejudice to plaintiffs from the standpoint of timing.

There was a hearing on the form of the final judgment about a month later. At this hearing, plaintiffs took the position for the first time that they were prejudiced by the timing of the grant of the motions in that they had previously reserved the right to redirect examination of certain witnesses. The record does not reflect this reservation. The court, in fact, required plaintiffs to complete their case prior to closing.

At the same hearing, plaintiffs urged the court to make it clear in the final judgment that the motions for directed verdicts were granted on the state of the record at the time the motions were granted. The court and all counsel agreed that this was the case and the judgment so provides. Having this in mind, plaintiffs take a different position here with respect to prejudice. They no longer urge the reservation of the right to redirect examination of the witnesses. They now contend that the court granted them the right to rebut evidence put in by Phillips in two instances. This evidence, produced from the files of Shell Oil Company, consisted of commitments to Cameron from oil producers to sell crude oil for transportation by Panotex. The pipeline of Panotex connected with that of Shell and all Cameron sales were to Shell. The other evidence was the record of oil deliveries from Cameron to Shell via Panotex. We are unable to perceive the need to rebut this evidence. We are not told how it could be rebutted, nor how it was in any way prejudicial. We find no prejudice to plaintiffs in these events.

We do not reach the question whether Rule 50, F.R.Civ.P.,¹ prohibits the granting of a motion for directed verdict during the presentation of a defendant's case. The rule contains no such restriction nor have we found any authority supporting such a restriction. Indeed, we have found no case in point one way or the other. The Supreme Court long ago pointed to the salutary purpose of a motion for directed verdict. In Merchants' National Bank of Boston v. State National Bank of Boston, 1871, 10 Wall. 604, 77 U.S. 604, 19 L.Ed. 1008, it was said with reference thereto:

"According to the settled practice in the courts of the United States, it was proper to give the instruction if it were clear the plaintiff could not recover. It would have been idle to proceed further when such must be the inevitable result. The practice is a wise one. It saves time and costs; it gives the certainty of applied science to the results of judicial investigation; it draws clearly the line which separates the provinces of the judge and the jury, and fixes where it belongs the responsibility which should be assumed by the court." 77 U.S. at 637

In the end, the question of directing a verdict for a defendant during the defendant's presentation is one of orderly procedure in the frame of reference of trial court discretion, procedural due process, and a fair trial. Here there is nothing of record to support any denigration of procedural due process or the essence of a fair trial. Thus we find no error as claimed.

From the view that plaintiffs must show prejudice, the situation is analogous to federal criminal procedure where the court commits error by reserving a ruling on a defendant's motion to acquit. The error is harmless absent a showing that the evidence was insufficient to sustain a conviction when the government rested its case. Cooper v. United States, 5 Cir., 1963, 321 F.2d 274, 277; Montoya v. United States, 5 Cir., 1968, 402 F.2d 847, 849-850; United States v. Day, 5 Cir., 1971, 438 F.2d 121, 122.

As Justice Field stated for the court in Oscanyan v. Winchester Repeating Arms Company, 1881, 103 U.S. 261, 26 L.Ed. 539, in a case where a verdict was directed following the opening statement of counsel:

". . . if in the progress of a trial, either by such admission of counsel or proof, a fact is developed which must necessarily put an end to the action, the court may, upon its own motion or that of counsel, act upon it and close the case." 103 U.S. at 263

II.

Before considering the merits of the action of the district court in granting the motions for directed verdict, it will be necessary to resolve the question presented with respect to the exclusion of certain evidence offered by plaintiffs. This question involves three separate items.

The first item is an inter-corporate letter from one Phillips employee to another, dated November 11, 1960, setting out the general situation in the industry as to oil reserves in the general geographical area pertinent to this suit. The letter mentions the prospect of raiding Shamrock's customers to increase Phillips' crude oil supply. The crude oil reserves and acquisition prospects of many oil companies in the area are also discussed. The position of plaintiffs is that this letter was admissible to show motive for later concerted...