Roorda v. American Oil Co.
| Decision Date | 17 February 1978 |
| Docket Number | Civ. No. 75-162. |
| Citation | 446 F. Supp. 939 |
| Parties | Arthur S. ROORDA, and Arthur S. Roorda, Inc. and all others similarly situated within the State of New York, Plaintiffs, v. AMERICAN OIL COMPANY, and Petroleum Sales & Service, Inc., Defendants. |
| Court | U.S. District Court — Western District of New York |
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Salvatore M. Latona, Latona, Worthington, Srebro & Nitterauer, Buffalo, N. Y., for plaintiffs.
Ralph L. Halpern, Raichle, Banning, Weiss & Halpern, Buffalo, N. Y., for defendant American Oil.
William J. Magavern, II, Magavern, Magavern, Lowe, Beilewech & Dopkins, Buffalo, N. Y., for defendant Petroleum.
Defendant Petroleum Sales and Service, Inc. ("Petroleum") moved by order to show cause for summary judgment pursuant to Fed.R.Civ.P. rule 56 dismissing plaintiffs' complaint for lack of subject matter jurisdiction on the ground that such complaint fails to satisfy the jurisdictional requirement, set forth in section 2(a) of the Clayton Act as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a), that either or any of the purchases involved in the alleged price discrimination be "in commerce". Thereafter, plaintiffs moved for leave to amend their complaint to allege, in addition to their original claim bottomed on the Robinson-Patman Act, causes of action under section 1 of the Sherman Act, 15 U.S.C. § 1, and under section 3 of the Clayton Act, 15 U.S.C. § 14.
Initially, it should be noted that the jurisdictional requirement of the Robinson-Patman Act is considerably more stringent than that contained in the Sherman Antitrust Act, 15 U.S.C. §§ 1 et seq. Under the Sherman Act, the jurisdictional interstate commerce prerequisite may be satisfied by showing either that the transactions were interstate or, if they were intrastate, that such transactions had "effects on" or "affected" interstate commerce. On the other hand, it is clear that under the Robinson-Patman Act such tests are not sufficient to bring an otherwise purely intrastate sale within the realm of interstate commerce and that a plaintiff has the burden to show that the transactions in question were in interstate commerce. This does not mean, however, that such transactions must in all cases actually cross a state line for the intrastate sale to be considered in interstate commerce. The United States Supreme Court in Standard Oil Co. v. Federal Trade Commission, 340 U.S. 231, 71 S.Ct. 240, 95 L.Ed. 239 (1951), adopted a "flow of commerce" test to determine whether intrastate discriminatory sales were "in commerce" within the meaning of section 2(a) of the Clayton Act, as so amended. Therein, plaintiff obtained gasoline from fields in Kansas, Oklahoma, Texas and Wyoming, refined it in Indiana and distributed it in fourteen states, including Michigan. The gasoline which plaintiff sold in the Detroit area and which was involved in the alleged discriminatory sales was transported by tankers on the Great Lakes from its refinery in Indiana to its marine terminal in River Rouge, Michigan. Sufficient gasoline was accumulated there during each navigation season to supply plaintiff's customers throughout the winter. The gasoline was stored for varying periods at the terminal or in nearby bulk storage tanks and throughout the temporary storage period was owned by plaintiff. Although plaintiff did not ship the gasoline to River Rouge pursuant to orders already taken, the demands of the Michigan market remained fairly constant and plaintiff could accurately estimate its customers' needs. Upon receipt of individual orders, plaintiff would deliver gasoline to the Detroit area from that stored at its River Rouge terminal. Based upon these facts, the Court held that the alleged discriminatory sales of gasoline in the Detroit area were "well within the jurisdictional requirements of the Act." Id., at 237, 71 S.Ct. at 243. The court further stated (at page 238, 71 S.Ct. 240) that the temporary storage of the gasoline at the terminal facilities in Michigan did not deprive the gasoline of its interstate character.
Petroleum contends that the flow of commerce doctrine has been repudiated in Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974). This contention is not well taken. The United States Court of Appeals for the Second Circuit in Great Atl. & Pac. Tea Co., Inc. v. F. T. C., 557 F.2d 971 (2d Cir. 1977), did not find the Copp case to be any impediment to application of flow of commerce principles and relied upon such doctrine to find "in commerce" jurisdiction over intrastate sales of milk. The court stated (at page 979) that:
Copp held that the alleged intrastate discriminatory sales of asphaltic concrete did not fall within the jurisdiction of section 2(a). The court based this conclusion on findings that the asphaltic concrete involved in such sales was made in California wholly from components produced and purchased within California and that due to its peculiar characteristics (its great weight, relatively low value and high temperature application restricted its use to within 35 miles from the hot plant where it was made), the market for asphaltic concrete was exclusively and necessarily within California. Based on these facts, the court concluded that "the alleged restraints of trade in asphaltic concrete could not be deemed within the flow of interstate commerce, despite use of the product in interstate highways." Id., 419 U.S. at 192, 95 S.Ct. at 397. Thus, the court merely held that the asphaltic concrete was never in interstate commerce at any time and that its purely intrastate character precluded application of the flow of commerce theory. Such holding does not reject flow of commerce principles but, on the contrary, the court utilized such to test the jurisdictional basis of the action and found that flow of commerce did not apply on the facts before it. In addition, throughout the opinion, reference was made to the flow of commerce doctrine without any indication that its viability was being questioned or being rejected. The court (at page 195, 95 S.Ct. at page 398) specifically interpreted the "in commerce" language of section 2(a) of the Clayton Act as denoting "persons or activities within the flow of interstate commerce — the practical, economic continuity in the generation of goods and services for interstate markets and their transport and distribution to the consumer." Furthermore, the court (at page 198, 95 S.Ct. 392, 398) clearly indicated that by its decision it was not overturning the flow of commerce doctrine but was solely refusing to adopt a nexus approach and to expand the relatively restrictive flow of commerce concept to include categories of activities which were merely connected to interstate instrumentalities. The court's citation of, and quotations from, Hiram Walker, Inc. v. A & S Tropical, Inc., 407 F.2d 4 (5th Cir.), cert. denied, 396 U.S. 901, 90 S.Ct. 212, 24 L.Ed.2d 177 (1969), and Belliston v. Texaco, Inc., 455 F.2d 175 (10th Cir.), cert. denied, 408 U.S. 928, 92 S.Ct. 2494, 33 L.Ed.2d 341 (1972), were made in the context of refusing to apply an "effects on commerce" approach to section 2(a). Those cases were relied upon to show only the consistent approach of the courts of appeals in interpreting the section as requiring either or any of the sales involved in the price discrimination to be "in interstate commerce" rather than merely having an "effect on" or "affecting" interstate commerce and not, as Petroleum contends, to demonstrate rejection of the flow of commerce doctrine.1
Furthermore, in addition to the decision in Great Atl. & Pac. Tea Co., Inc. and my interpretation of Standard Oil and Copp, the opinion in Hampton v. Graff Vending Co., 516 F.2d 100 (5th Cir. 1975), indicates that the flow of commerce theory remains a viable doctrine despite any doubts expressed in Red Apple Supermarkets, Inc. v. Deltown Foods, Inc., 419 F.Supp. 1256 (S.D.N.Y.1976). In Hampton v. Graff Vending Co., supra at 102, the court stated that:
"Generally, if it can be shown that goods shipped from outside the state are still within the `practical, economic continuity' of the interstate transaction at the time of the intrastate sale of goods, that latter sale will be considered `in commerce' for purposes of the Robinson-Patman Act."
The court then noted, citing and quoting from Walker Oil Company v. Hudson Oil Company of Missouri, 414 F.2d 588, 590 (5th Cir. 1969), cert. denied, 396 U.S. 1042, 90 S.Ct. 684, 24 L.Ed.2d 686 (1970), that three factual situations had been recognized which, if proven by a plaintiff, would establish that goods shipped into a state would remain within the flow of commerce so as to satisfy the jurisdictional "in commerce" hurdle of section 2(a) of the Clayton Act:
"Where they are purchased by the wholesaler or retailer upon the order of a customer with the definite intention that the goods are to go at once to the customer; where the goods are purchased by the wholesaler or retailer from the supplier to meet the needs of specified customers pursuant to some understanding with...
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