Phillips v. Crown Central Petroleum Corporation

• Decision Date: 20 September 1973
• Docket Number: 73-304-H,73-504-H and 73-506-H.,Civ. No. 73-303-H
• Citation: 376 F. Supp. 1250
• Parties: John T. PHILLIPS, Jr., Plaintiff, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant. Corrado Frank TUMMINELLO, Plaintiff, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant. Charles Phillip FREITAG, Plaintiff, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant. Carroll Charles MYERS, Plaintiff, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant.
• Court: U.S. District Court — District of Maryland

376 F. Supp. 1250

John T. PHILLIPS, Jr., Plaintiff, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant.

Corrado Frank TUMMINELLO, Plaintiff, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant.

Charles Phillip FREITAG, Plaintiff, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant.

Carroll Charles MYERS, Plaintiff, v. CROWN CENTRAL PETROLEUM CORPORATION, Defendant.

Civ. Nos. 73-303-H, 73-304-H, 73-504-H and 73-506-H.

United States District Court, D. Maryland.

September 20, 1973.

Robert G. Levy and Frank, Bernstein, Conaway & Goldman, Baltimore, Md., for plaintiffs.

James H. Kelley and Bergson, Borkland, Margolis & Adler, Washington, D. C., and Morton A. Sacks and Cable, McDaniel, Bowie & Bond, Baltimore, Md., for defendant.

MEMORANDUM OPINION

ALEXANDER HARVEY, II, District Judge:

Each plaintiff in these four cases is an independent gasoline service station dealer operating a station leased from defendant, Crown Central Petroleum Corporation. Each plaintiff has filed a separate action herein, seeking treble damages from defendant and injunctive relief under the Clayton and Sherman Acts. Presently before the Court is a combined motion filed in each case for a preliminary injunction under Section 16 of the Clayton Act, 15 U.S.C. § 26, seeking to enjoin the defendant and its agents and representatives from terminating or threatening to terminate, or not renewing or threatening not to renew, the Leases and Dealer and Equipment Loan Contracts entered into between the parties, pending the final determination of the antitrust actions. Other injunctive relief is also sought, but the basic issue now before the Court is whether plaintiffs' leases shall be continued or renewed during the pendency of these actions, or whether such leases shall be permitted to expire under their terms, with other lessees presumably occupying the stations in question while these actions continue.

Defendant Crown Central Petroleum Corporation, a Maryland corporation, is a large refiner and marketer of petroleum, although not in the same class as giants like Texaco, Gulf and Exxon. To compete with these giants, Crown, during the late 1960's, changed its retail outlets from conventional service stations to so-called multi-pump operations selling at discount prices. During the same period, it converted from Company owned and operated stations to stations leased to and operated by independent dealers such as the plaintiffs. Crown currently has approximately 30 multi-pump stations in the Baltimore marketing area.

Plaintiff Phillips has been a Crown service station dealer since December 21, 1970 and has been at his present location on Ritchie Highway since January 25, 1971, principally under one-year leases. On January 9, 1973, he was given a new six-month "probationary" Lease and Dealer and Equipment Loan Contract. On April 3, 1973, he filed an antitrust action in this Court, alleging that the defendant Crown had violated Section 1 of the Sherman Act, 15 U.S.C. § 1. In the three Counts of his complaint, plaintiff Phillips alleges (1) a horizontal conspiracy between defendant and certain of its competitors to fix and maintain wholesale and retail gasoline prices and retail motor oil prices in the Baltimore area, (2) an illegal vertical undertaking by defendant to fix plaintiff's gas and oil retail prices and (3) an unlawful agreement or combination to prevent Phillips and other Crown dealers from obtaining motor oils, antifreeze, vending machines and vending machine supplies from sources other than Crown or from suppliers other than those designated by Crown. On May 5, 1973, some one month after suit was filed, Crown notified Phillips that his lease and contract would not be renewed. By agreement of counsel, the expiration date was continued to September 9, 1973.

Plaintiff Tumminello commenced operations as a Crown dealer on March 9, 1969 at his Belair Road service station, under the usual one-year lease given to similar station operators. Prior to that, he had served since 1964 as a Crown Sales Representative. Following successive renewals of his one-year leases, in March 1973, he was given a six-month "probationary" Lease and Dealer and Equipment Loan Contract. On April 3, 1973, he too filed an antitrust suit in this Court against Crown which contained allegations almost identical with those in the suit filed by Phillips. On May 5, 1973, he too was notified that his lease and contract would be allowed to expire on September 9, 1973.

Plaintiff Freitag has been a Crown dealer since November 25, 1970, after serving as a manager of his Harford Road station for about a month while it was operated by Crown. On May 25, 1973, he filed in this Court an antitrust suit against Crown which contained allegations almost identical with those in the suit filed by Phillips. On or about August 1, 1973, Freitag was notified that his lease and contract would be allowed to expire on November 25, 1973.

Plaintiff Myers, the fourth plaintiff, has been a Crown dealer at his present station at Old Stage and Quarterfield Roads since August 18, 1970. On May 25, 1973, he filed an antitrust suit in this Court against Crown which contained allegations almost identical with those in the suit filed by Phillips. On June 28, 1973, Crown offered Myers a one-year renewal if he would sign Crown's new Lease and Dealer Agreement. Myers duly executed the Agreement and returned it to Crown, but he specifically reserved the right to challenge in his suit several provisions in this revised contract and lease. For this reason, Crown declined to accept the executed papers. Myers' lease has been extended by agreement to September 9, 1973. At a status conference held in these four cases on August 14, 1973 (and it should be noted that the same attorneys represent all four plaintiffs in these actions), plaintiffs' counsel advised the Court that three of the leases would expire September 9, 1973 and the fourth on November 25, 1973, and that plaintiffs would shortly be filing a combined motion for a preliminary injunction to prevent expiration of the leases during the pending litigation. Plaintiffs requested an immediate evidentiary hearing on the motion, which counsel estimated would last some five or six days.

At such conference, counsel were advised that the Court's schedule would not permit the holding of a lengthy evidentiary hearing before September 9, 1973. Counsel were accordingly invited to file briefs and affidavits in support of and in opposition to plaintiffs' motion for a preliminary injunction, whereupon the Court would schedule a hearing on the motion as soon as possible. Extensive briefs and voluminous affidavits, exhibits and excerpts from depositions have now been filed by both sides. Full argument was heard on the matter, and in view of the urgency of the situation, the Court agreed to rule on the motion immediately. Defendant's counsel have agreed to extend the existing leases until the Court has rendered a decision on the motion. Findings of fact and conclusions of law are contained in this Opinion.

The complaints in these cases raise many different factual and legal antitrust questions, including claims of horizontal price fixing, vertical price fixing and tying agreements. But it is not necessary in deciding this motion for the Court to concern itself with all the allegations in the complaints and all the denials in the answers, with reference to alleged violations of the antitrust laws by defendant. The only question presently before the Court is whether the relationship between plaintiffs and defendant which existed at the time suit was filed should be continued during the time it takes to have these cases finally tried to a decision.

Plaintiffs claim that their leases are not being renewed because they have refused to comply with illegal directives from defendant to raise and lower prices as and when required by defendant and to use motor oils, antifreeze and vending machines designated by defendant. In particular, plaintiffs point out that they received notices to terminate their leases only after these actions had been filed, charging defendant with various antitrust violations.

Defendant Crown on the other hand claims that plaintiffs' leases are not being renewed because of legitimate business reasons, namely because plaintiffs have failed to maintain proper standards and an adequate cooperative spirit enabling them to compete effectively. Crown argues that plaintiffs saw the handwriting on the wall and, claiming violations of antitrust law that were manufactured, filed suit in anticipation of the termination of their relationship with Crown so as to be able to enlist the injunctive powers of this Court to continue leases which Crown legally had the right to discontinue.

The decision to issue a preliminary injunction is discretionary with the Court. As was said by the Fourth Circuit, the factors to be considered by a district judge have long been settled in this Circuit and are stated in West Virginia Highlands Conservancy v. Island Creek Coal Co., 441 F.2d 232, 235 (4th Cir. 1971), as follows:

"`It is sufficient if the court is satisfied that there is a probable right and a probable danger and that the right may be defeated, unless the injunction is issued, and considerable weight is given to the need of protection to the plaintiff as contrasted with the probable injury to the defendant * * *'"

quoting from Sinclair Refining Co. v. Midland Oil Co., 55 F.2d 42, 45 (4th Cir. 1932). Other Fourth Circuit cases have indicated that the inquiry must also determine whether plaintiff will suffer irreparable injury if the injunction is not issued. Long v. Robinson, 432 F.2d 977 (4th Cir. 1970).

Initially, the question is raised in the present case whether a motion for a preliminary injunction can be granted or denied without an evidentiary hearing, particularly where there are conflicting affidavits. See S.E.C. v. Frank, 388 F.2d 486 (2d Cir. 1968). However,...