Sahm v. V-1 Oil Company, 9647.

• Decision Date: 02 December 1968
• Docket Number: No. 9647.,9647.
• Citation: 402 F.2d 69
• Parties: Stephen K. SAHM, Appellant, v. V-1 OIL COMPANY, a corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

402 F.2d 69 (1968)

Stephen K. SAHM, Appellant, v. V-1 OIL COMPANY, a corporation, Appellee.

No. 9647.

United States Court of Appeals Tenth Circuit.

October 16, 1968.

Rehearing Denied December 2, 1968.

Justin C. Stewart, of Stewart, Topham & Harding, Salt Lake City, Utah, for appellant.

Daniel L. Berman, Salt Lake City, Utah, for appellee.

Before LEWIS, SETH and HICKEY, Circuit Judges.

DAVID T. LEWIS, Circuit Judge.

This appeal is taken from an order of the District Court for the District of Utah dismissing the appellant-plaintiff's amended complaint and action for failure to state a claim upon which relief can be granted. Rule 12(b, c), Fed.R.Civ.P. The complaint is founded on section 1 of the Sherman Act¹ and we accept the allegations as true for the purposes of present review. United States v. Reilly, 10 Cir., 385 F.2d 225. The allegations need only to be narratively summarized.

On August 26, 1966, plaintiff by written instrument leased from defendant a retail gasoline service station located in Salt Lake City, Utah. The lease provided for a primary term of one year, and thereafter from year to year, with the right to termination reserved to each party through thirty-day written notice. The lease contemplated the operation of the service station under defendant's trade name and colors. At the same time the parties entered into an oral agreement providing for the consignment to plaintiff of gasoline furnished by defendant and to be retailed at prices set by defendant. Plaintiff's commission profit was variable and dependent in amount upon the retail price level as determined by defendant.

Plaintiff abided by the terms of the total agreement until the middle of October 1966, at which time, without defendant's consent, he raised his retail price from 26.9¢ per gallon to 29.9¢ per gallon. On October 26, defendant through its sales manager protested the price increase and threatened cancellation of the lease unless plaintiff would resume compliance with the agreement as it pertained to retail sales pricing. On October 28, defendant gave letter notice of the cancellation of the lease effective in thirty days as provided by the lease. A few days later plaintiff was told by defendant's sales manager that termination could be prevented if plaintiff would set his retail price in accord with defendant's schedule. Plaintiff remained adamant and the lease was canceled on November 28, 1966. Plaintiff asserts the cancellation was motivated by his refusal to set his retail price at levels fixed by defendant, that damage resulted, and characterizes the agreement and acts of defendant as a collusive price-setting scheme violative of the cited statute.

It is immediately apparent that plaintiff has alleged the existence and operation of a total agreement that if continued would directly and effectively control both prices and profits. Such an agreement or combination smacks of a per se violation of § 1 of the Sherman Act. Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 71 S.Ct. 259, 95 L.Ed. 219; United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129. Indeed, defendant concedes the violative nature of the plan during its operative period but argues that the complaint is fatally defective because of a lack of an existing conspiracy at the time of the cancellation of the lease and during the period for which damages are sought. Defendant thus characterizes the complaint as alleging no more than a mere unilateral refusal to deal regardless of motivation and so within the confines of acceptable business policy.

It is true that a mere announcement in advance of a policy and an unilateral refusal to deal with those who reject the announced policy does not run counter to the antitrust laws;² however, where the producer or supplier "secures adherences to his suggested price by means which go beyond his mere declination to sell to a customer who will not observe his announced policy," United States v. Parke, Davis & Co., 362 U. S. 29, 43, 80 S.Ct. 503, 511, 4 L.Ed.2d 505, the antitrust laws are violated. Petitioner herein alleges that before appellee canceled the lease his agent threatened immediate cancellation of the lease unless appellant complied with the provisions of the illegal agreement and it was only when such threat failed and in response to the failure that the lease was canceled. Also petition alleges that during the thirty-day cancellation period required by the written contract that appellee's agent called upon him and assured him that he could save the lease if he would abide by the oral resale price maintenance agreement. This alleged attempt on behalf of appellee and his agent to coerce appellant into reinstating an illegal agreement cannot be classified as a mere refusal to deal.

Defendant also emphasizes the fact that the complaint contains no allegation that defendant conspired with others in price setting and does allege affirmatively that plaintiff repudiated the admittedly prohibited agreement before the cancellation of the lease. Therefore, so says defendant, there was no existent conspiracy to found a section 1 violation, citing Quinn v. Mobil Oil Co., 1 Cir., 375 F.2d 273, cert. denied 389 U.S. 801, 88 S.Ct. 8, 19 L.Ed.2d 56; Dart Drug Corp. v. Parke, Davis & Co., 120 U.S.App.D.C. 79, 344 F.2d 173; House of Materials, Inc. v. Simplicity Pattern Co., 2 Cir., 298 F.2d 867; Nelson Radio & Supply Co. v. Motorola Inc., 5 Cir., 200...