Perkins v. Standard Oil Company of California, 624

• Decision Date: 16 June 1969
• Docket Number: No. 624,624
• Parties: Clyde A. PERKINS, Petitioner, v. STANDARD OIL COMPANY OF CALIFORNIA
• Court: U.S. Supreme Court

395 U.S. 642

89 S.Ct. 1871

23 L.Ed.2d 599

Clyde A. PERKINS, Petitioner,

v STANDARD OIL COMPANY OF CALIFORNIA.

No. 624.

Argued April 22, 23, 1969.

Decided June 16, 1969.

Rehearing Denied Oct. 13, 1969.

See 90 S.Ct. 36.

Earl W. Kintner and George R. Kucik, Washington, D.C., for petitioner.

Richard J. MacLaury, San Francisco, Cal., for respondent.

Mr. Justice BLACK delivered the opinion of the Court.

In 1959 petitioner, Clyde A. Perkins, brought this civil antitrust action against the Standard Oil Company of California seeking treble damages under § 2 of the Clayton Act, as amended by the Robinson-Patman Act,¹ for injuries alleged to have resulted from Standard's price discriminations in the sale of gasoline and oil during a period of over two years from 1955 to 1957. In 1963, after a lengthy and complicated trial, the jury returned a verdict for Perkins and assessed damages against Standard of $333,404.57, which, after trebling by the court and after the addition of attorney's fees, resulted in a total judgment against Standard of $1,298,213.71. On review, the Court of Appeals for the Ninth Circuit held that the assessment of damages included injuries to Perkins that were not recoverable under the Act and therefore ordered a new trial. Standard Oil Co. of California v. Perkins, 9 Cir., 396 F.2d 809. We granted certiorari to determine whether the Court of Appeals, in reversing the judgment, had correctly construed the Robinson-Patman Act.

Petitioner Perkins entered the oil and gasoline business in 1928 as the operator of a single service station in the State of Washington. By the mid-1950's he has become one of the largest independent distributors of gasoline and oil in both Washington and Oregon. He was both a wholesaler, operating storage plants and trucking equipment, and a retailer through his own Perkins stations. From 1945 until 1957, Perkins purchased substantially all of his gasoline requirements from Standard. From 1955 to 1957 Standard charged Perkins a higher price for its gasoline and oil than Standard charged to its own Branded Dealers,² who competed with Perkins, and to Signal Oil & Gas Co., a wholesaler whose gas eventually reached the u mps of a major competitor of Perkins. Perkins contends that Standard's price and price-related discriminations against him seriously harmed his competitive position and forced him, in 1957, to sacrifice by sale what remained of his once independent business to one of the major companies in the gasoline business, Union Oil.

Many of the elements of liability on the part of Standard are not in dispute. Standard has admitted that it sold gasoline and oil to its Branded Dealers and to Signal Oil at discriminatorily lower prices than those at which it sold to Perkins. The Court of Appeals found that Standard's liability for the harm done Perkins by the favorable treatment of the Perkins by the favorable treatment pute. Of this aspect of the damages, the Court of Appeals said:

'The Branded Dealers purchased gasoline and oil from Standard which they in turn sold at retail. With respect to them, Perkins' story is quickly told. Because of Standard's favoritism and discrimination they were able to and did offer lower prices and better services and facilities than Perkins in marketing at retail.' 396 F.2d, at 812.

With regard to Perkins' damage resulting from Standard's discrimination in favor of Signal Oil, however, the Court of Appeals took a different view because of the following circumstances under which the discriminary sales were made. Standard admittedly sold gasoline to Signal at a lower price than it sold to Perkins. Signal sold this Standard gasoline to Western Hyway, which in turn sold the Standard gasoline to Regal Stations Co., Perkins' competitor. Perkins alleged that the lower price charged Signal by Standard was passed on to Signal's subsidiary Western Hyway, and then to Western's subsidiary, Regal. Regal's stations were thus able to undersell Perkins' stations and, according to Perkins, the resulting competitive harm, along with that he suffered at the hands of Standard's favored Branded Dealers, destroyed his ability to compete and eventually forced him to sell what was left of his business. The Court of Appeals held, however, that any harm suffered by Perkins from impaired competition with Regal stations was beyond the scope of the Robinson-Patman Act because Regal was too far removed from Standard in the chain of distribution. A substantial part of the damages the jury assessed against Standard, as the Court of Appeals viewed it, might have been based upon a finding that Perkins suffered competitive harm from the price advantage held by Regal stations. That court, concluding that 'the whole verdict is tainted, since the amount reflected in it by Regal's conduct cannot be ascertained; * * *' reversed the judgment and ordered a new trial. 396 F.2d, at 813.

We disagree with the Court of Appeals' conclusion that § 2 of the Clayton Act, as amended by the Robinson-Patman Act, does not apply to the damages suffered by Perkins as a result of the price advantage granted by Standard to Signal, then by Signal to Western, then by Western to Regal. The Act, in pertinent part, provides:

'(a) It shall be unlawful for any person engaged in commerce, * * * either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, * * * where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them * * *'.

The Court of Appeals read this language as limiting 'the distributing levels on which a supplier's price discrimination will be recognized as potentially injurious to competition. 396 F.2d, at 812. According to that court, the coverage of the Act is restricted to injuries caused by an impairment of competition with (1) the seller ('any person who * * * grants * * * such discrimination'), (2) the favored purchaser ('any person who * * * knowingly receives the benefit of such discrimination'), and (3) customers of the discriminating seller or favored purchaser ('customers of either of them'). Here, Perkins' injuries resulted in part from impaired competition with a customer (Regal) of a customer (Western Hyway) of the favored purchaser (Signal). The Court of Appeals termed these injuries 'fourth level' and held that they were not protected by the Robinson-Patman Act. We conclude that this limitation is wholly an artificial one and is completely unwarranted by the language or purpose of the Act.

In FTC v. Fred Meyer, Inc., 390 U.S. 341, 88 S.Ct. 904, 19 L.Ed.2d 1222 (1968), we held that a retailer who buys through a wholesaler could be considered a 'customer' of the original supplier within the meaning of § 2(d) of the Clayton Act, as amended by the Robinson-Patman Act, a section dealing with discrimination in promotional allowances which is closely analogous to § 2(a) involved in this case. In Meyer, the Court stated that to read 'customer' narrowly would be wholly untenable when viewed in light of the purposes of the Robinson-Patman Act. Similarly, to read 'customer' more narrowly in this section than we did in the section involved in Meyer would allow price discriminators to avoid the sanctions of the Act by the simple expedient of adding an additional link to the distribution chain. Here, for example, standard supplied gasoline and oil to Signal. Signal, allegedly because it furnished Standard with part of its vital supply of crude petroleum, was able to insist upon a discriminatorily lower price. Had Signal then sold its gas directly to the Regal stations, giving Regal stations a competitive advantage, there would be no question, even under the decision of the Court of Appeals in this case, that a clear violation of the Robinson-Patman Act had been committed. Instead of selling directly to the re- tailer Regal, however, Signal transferred the gasoline first to its subsidiary, Western Hyway, which in turn supplied the Regal stations. Signal owned 60% of the stock of Western Hyway; Western in turn owned 55% of the stock of the Regal stations. We find no basis in the language or purpose of the Act for immunizing Standard's price discriminations simply because the product in question passed through an additional formal exchange before reaching the level of Perkins' actual competitor. From Perkins' point of view, the...