Russ' Kwik Car Wash, Inc. v. Marathon Petroleum Co.

• Decision Date: 05 September 1985
• Docket Number: No. 84-3097,84-3097
• Citation: 772 F.2d 214
• Parties: 1985-2 Trade Cases 66,796 RUSS' KWIK CAR WASH, INC.; Clean Cars, Inc., Plaintiffs-Appellants, v. MARATHON PETROLEUM COMPANY; Gastown, Inc.; Emro Marketing Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 214

772 F.2d 214

1985-2 Trade Cases 66,796

RUSS' KWIK CAR WASH, INC.; Clean Cars, Inc., Plaintiffs-Appellants, v. MARATHON PETROLEUM COMPANY; Gastown, Inc.; Emro Marketing Company, Defendants-Appellees.

No. 84-3097.

United States Court of Appeals Sixth Circuit.

Argued Jan. 25, 1985.

Decided Sept. 5, 1985.

David M. Schnorf, Donna M. Engwert, Schnorf, Wanick, Loyd & Engwert, and Kelly D. Stimpson, argued, Toledo, Ohio, for plaintiffs-appellants.

Paul M. Pohl, argued, Jones, Day, Reavis & Pogue, and A. Theodore Gardiner III, Cleveland, Ohio, for defendants-appellees.

Before KENNEDY and CONTIE, Circuit Judges, and HILLMAN, District Judge. ^*

PER CURIAM.

Plaintiffs appeal from the summary judgment granted in favor of defendants in this antitrust action. The principal issue on appeal is whether the transfer of a product from a parent corporation to its wholly-owned subsidiary corporation is a "sale" for purposes of section 2(a) of the Clayton Act as amended by the Robinson-Patman Act, 15 U.S.C. Sec. 13(a). We hold that it is not and affirm.

I

This case arises from the operation of a car wash and gasoline station by plaintiffs Russ' Kwik Car Wash, Inc. and Clean Cars, Inc. The plaintiffs' facility is located on an "L"-shaped parcel of land adjacent to one corner of a major Toledo, Ohio intersection. On the corner lot, surrounded on two sides by the "L"-shaped lot, is a Gastown service station owned and operated by defendant Emro Marketing Company, a wholly-owned subsidiary of defendant Marathon Petroleum Company. Gastown is an unincorporated division of Emro Marketing Company. ¹ The "L"-shaped parcel is owned by Marathon and leased to Russ' Kwik for a period of fifteen to thirty years, ending in 1995. In conjunction with the lease, Russ' Kwik and Marathon entered into a supply agreement under which Marathon agreed to supply Russ' Kwik with Marathon brand gasoline and other petroleum products.

In 1976 Russ' Kwik changed ownership, and the new owners installed new equipment and decided on a new marketing strategy. Their new policy was to sell their Marathon gasoline a penny per gallon cheaper than any of the four other gas stations at the intersection, thereby attracting gas customers, some of whom would also purchase car washes. In 1977, self-service stations became legal in Ohio, and Emro decided to convert the corner Gastown station to self-serve. Emro unsuccessfully negotiated with Russ' Kwik in an effort to obtain some or all of the leased property for use in expanding the Gastown station. When the Gastown began operating on a self-serve basis, a price war broke out between the Gastown station and Russ' Kwik. Russ' Kwik alleges that on occasion the Gastown station dropped its retail price beneath the wholesale price that Marathon charged Russ' Kwik, and that Marathon charged Russ' Kwik a higher price for gasoline than it charged Emro.

Russ' Kwik and its owner, Clean Cars, Inc., then brought this antitrust action, alleging violations of sections 1 and 2 of the Sherman Act, section 3 of the Clayton Act, and section 2 of the Robinson-Patman Act, as well as several pendent state claims. The defendants moved for summary judgment on all claims, and both sides submitted affidavits and depositions. The District Court granted summary judgment for defendants on all claims, and plaintiffs appeal. On appeal the plaintiffs do not contest the dismissal of their Sherman Act Sec. 2 monopolization claim or the pendent state claims. Plaintiffs also do not contest on appeal the dismissal of their claims under Secs. 2(d) and 2(e) of the Robinson-Patman Act. The only remaining Robinson-Patman Act claim is under Sec. 2(a).

Summary judgment is proper when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "In ruling on a motion for summary judgment the trial court must view the evidence in the light most favorable to the party opposing the motion. On review this Court must do the same." New Jersey Life Insurance Co. v. Getz, 622 F.2d 198, 200 (6th Cir.1980). With these standards in mind, we will first consider plaintiffs' Sherman Act Sec. 1 and illegal tying arrangement claims, and then plaintiffs' Robinson-Patman Act claim.

II

In their memorandum supporting their motion for summary judgment on the Sherman Act Sec. 1 claim, the defendants argued that summary judgment was proper for two reasons: (1) there was no evidence that Marathon had communicated with Emro about plaintiffs, and (2) a corporation is legally incapable of conspiring with its subsidiary. The District Court granted summary judgment on the grounds that "the plaintiffs have produced no evidence of a conspiracy." We need not consider whether this conclusion was correct, however, since it is clear, after the Supreme Court's opinion in Copperweld Corp. v. Independence Tube Corp., --- U.S. ----, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), that the summary judgment was proper on this claim for the second reason advanced by defendants. A decision below must be affirmed if correct for any reason, including a reason not considered by the lower court. J.E. Riley Investment Co. v. Commissioner, 311 U.S. 55, 59, 61 S.Ct. 95, 97, 85 L.Ed. 36 (1940).

Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, provides:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal....

This section applies only to action by at least two separate entities that form a contract, combination, or conspiracy. E.g., Copperweld, 104 S.Ct. at 2740. In Copperweld the Supreme Court overruled earlier cases that had supported the "intra-enterprise conspiracy" doctrine, and held that "the coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of Sec. 1 of the Sherman Act." Copperweld, 104 S.Ct. at 2742. The only conspiracy alleged in this case is one between Marathon and Emro. There is no dispute that Emro is a wholly-owned subsidiary of Marathon. Judgment for defendants on the section 1 conspiracy claim must therefore be affirmed.

III

Plaintiffs alleged that the defendants improperly tied the lease of the "L"-shaped parcel to the sale of Marathon gasoline, in violation of Sec. 3 of the Clayton Act. The District Court correctly granted summary judgment for defendants in the Clayton Act Sec. 3 claim because that section applies only to sales of "commodities," which do not include the lease of real property. See Northern Pacific Railway Co. v. United States, 356 U.S. 1, 13 & n. 1, 78 S.Ct. 514, 522 & n. 1, 2 L.Ed.2d 545 (1958) (Harlan, J., dissenting); Lessig v. Tidewater Oil Co., 327 F.2d 459, 469 n. 24 (9th Cir.), cert. denied, 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046 (1964); Tire Sales Corp. v. Cities Service Oil Co., 410 F.Supp. 1222, 1227 (N.D.Ill.1976), rev'd on other grounds, 637 F.2d 467 (7th Cir.1980), cert. denied, 451 U.S. 920, 101 S.Ct. 1999, 68 L.Ed.2d 312 (1981).

In their complaint plaintiffs expressly based their tying claim on Sec. 3 of the Clayton Act. In their motion for summary judgment, defendants argued that the tying claim could not proceed under the Clayton Act since a lease of real property is not covered by that statute. In response, plaintiffs specifically argued that their tying claim should be allowed to proceed under Sec. 3 of the Clayton Act. In their reply defendants reiterated their argument that the Clayton Act does not apply to a lease of real property. Plaintiffs then brought their own motion for summary judgment in which they again pressed the validity of their tying claim under Sec. 3 of the Clayton Act.

In their briefs on appeal, plaintiffs have abandoned the theory of their tying claim that they repeatedly urged in the District Court, and now contend that the District Court erred in granting summary judgment because the tying claim should be allowed to proceed under Sec. 1 of the Sherman Act. This Court, however, will generally not consider questions not raised in the court below. E.g., Brown v. Marshall, 704 F.2d 333, 334 (6th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 120, 78 L.Ed.2d 119 (1984); Ruip v. United States, 555 F.2d 1331, 1337 (6th Cir.1977); Bannert v. American Can Co., 525 F.2d 104, 111 (6th Cir.1975), cert. denied, 426 U.S. 942, 96 S.Ct. 2662, 49 L.Ed.2d 394 (1976); Dupes v. Johnson, 353 F.2d 103, 105 (6th Cir.1965). Plaintiffs' arguments concerning the sufficiency of pleadings are inapposite; although it is possible that plaintiffs would have been allowed to raise a Sherman Act Sec. 1 tying claim in the District Court, the fact is that they made no attempt to raise such a claim even after defendants twice argued that the tying claim could not proceed under the Clayton Act. Our refusal to consider this claim is particularly appropriate here because defendants have not had the opportunity to submit affidavits in support of summary judgment on a Sherman Act tying claim. A Sherman Act tying claim requires a showing of monopoly power in the tying product, which is not needed under the Clayton Act if a substantial volume of commerce in the tied product is restrained. Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 608-09, 73 S.Ct. 872, 880-81, 97 L.Ed. 1277 (1953). The rule that this Court will not consider questions not presented below "applies with particular force when the new issue requires development of additional facts." Brown v. Marshall, 704 F.2d 333, 334 (6th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 120, 78 L.Ed.2d 119 (1984). The District Court did not err in granting summary judgment for defendants on plaintiffs' tying claim.

IV

Section 2(a) of the Clayton Act, as amended by the ...