Sinclair Oil Corp. v. Atlantic Richfield Co., Civ. No. C-88-628W.

• Decision Date: 05 September 1989
• Docket Number: Civ. No. C-88-628W.
• Citation: 720 F. Supp. 894
• Parties: SINCLAIR OIL CORPORATION, Plaintiff, v. ATLANTIC RICHFIELD COMPANY, Defendant.
• Court: U.S. District Court — District of Utah

720 F. Supp. 894

SINCLAIR OIL CORPORATION, Plaintiff, v. ATLANTIC RICHFIELD COMPANY, Defendant.

Civ. No. C-88-628W.

United States District Court, D. Utah, C.D.

September 5, 1989.

Richard W. Giauque, Gary F. Bendinger, Scott M. Lilja, Salt Lake City, Utah, Melvin Goldstein, Washington, D.C., Dennis C. Stickley, Corporate Counsel, Sinclair Oil Corp., Salt Lake City, Utah, for plaintiff.

Robert A. Peterson, Salt Lake City, Utah, David L. Roll, Washington, D.C., for defendant.

MEMORANDUM DECISION AND ORDER

WINDER, District Judge.

The court heard argument on defendant Atlantic Richfield Company's ("ARCO") motion to dismiss or for summary judgment on May 12, 1989. Plaintiff, Sinclair Oil Corporation ("Sinclair"), was represented by Richard W. Giauque, Melvin Goldstein, and Scott M. Lilja. Defendant, ARCO, was represented by Robert A. Peterson and David L. Roll. Prior to the hearing the court had reviewed the memoranda and exhibits filed by the parties. The court took the matter under advisement, and now being fully advised as to the facts and the law, the court renders the following memorandum decision and order.

BACKGROUND

Sinclair filed this lawsuit on July 19, 1988 and is seeking treble damages for overcharges allegedly resulting from intentional violations by ARCO of the Economic Stabilization Act of 1970 (ESA), ? 210, 12 U.S.C.A. ? 1904 note, as incorporated by reference into the Emergency Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C. ? 751 et seq., ? 754(a)(1).

Pursuant to the EPAA, the Cost of Living Council¹ passed pricing regulations which precluded a refiner from charging "a price for a covered product in excess of the maximum allowable price," 10 C.F.R. ? 212.81(a), where "maximum allowable price" was defined as

the weighted average price at which the product was lawfully priced in transactions with the class of purchaser concerned on May 15, 1973 computed in accordance with the provisions of ? 212.83(a), plus increased product costs and increased non-product costs incurred between the month of measurement and the month of May 1973....

Id. ? 212.82. The regulations were complex and comprehensive, setting forth the precise definitions, accounting methods, and subcalculations to be used under the general refiner price rule. The regulations were in effect from August 20, 1973 through January 28, 1981, and were periodically amended. A violation of any of these regulations potentially could result in an overcharge to the purchaser.

Any such overcharges were recoverable by the injured purchaser under ? 210 of the ESA.² A person intentionally charged a price in excess of the maximum allowable price could sue to recover as much as three times the amount of the overcharge³, ESA ? 210(b). A person unintentionally overcharged "notwithstanding the maintenance of procedures reasonably adapted to the avoidance of such error" could sue to recover the amount of the actual overcharge, id.

A specific instance of conduct by the refiner which violates one or more pricing regulations and causes an overcharge creates an ESA cause of action, Lerner v. Atlantic Richfield Co., 731 F.2d 898, 901 (Temp.Emer.Ct.App.1984).⁴ See also Go-Tane Service Stations, Inc. v. Clark Oil & Ref. Corp., 798 F.2d 481, 484 (Temp.Emer. Ct.App.1986) cert. denied 479 U.S. 1008, 107 S.Ct. 648, 93 L.Ed.2d 704 (1986). "The statute of limitations begins to run when an act with decisive continuing effect causes intitial injury at a given time...." Go-Tane, 798 F.2d at 486; see also CPI Crude, Inc. v. Coffman, 776 F.2d 1546, 1552-53 (Temp.Emer.Ct.App.1985); Oerther v. Pennzoil Co., 763 F.2d 420, 421 (Temp.Emer.Ct.App.1985). The specific violation is not "continuing" for purposes of tolling the statute of limitations, Go-Tane, 798 F.2d at 485; CPI Crude, 776 F.2d at 1552-53; Oerther, 763 F.2d at 421.

ARCO has moved to dismiss or for summary judgment on all of Sinclair's claims on statute of limitations grounds. ARCO asserts that Sinclair's treble damage claims have a one year statute. Sinclair responds that its claims have a four year limitations period, and that its lawsuit is timely because those statutory periods were tolled under either a fraudulent concealment theory or a class action theory, or both.

TREBLE DAMAGE CIAIM LIMITATIONS PERIOD

Because the ESA and the EPAA do not contain a specific statute of limitations, we must apply the most closely analogous state statute, CPI Crude, Inc. v. Coffman, 776 F.2d 1546, 1550 (Temp.Emer.Ct.App. 1985).⁵ Resolution of this issue is a pure question of law.

ARCO, relying primarily on Ashland Oil Co. of California v. Union Oil Co. of California, 567 F.2d 984 (Temp.Emer.Ct. App.1977), and Martin Oil Service, Inc. v. Koch Refining Co., 718 F.Supp. 1334 (N.D. Ill.1989), asserts that Sinclair's treble damage action⁶ is subject to Utah's one year limitations period for "an action upon a statute for a penalty," Utah Code Ann. ? 78-12-29(2). Sinclair, relying primarily on Carbone v. Gulf Oil Corp., 812 F.2d 1416 (Temp.Emer.Ct.App.1987) and U.S. Oil Co., Inc. v. Koch Ref. Co.,⁷ Civ. No. 79-C-659 (E.D.Wisc.), contends that the treble damage action is subject to Utah's four year limitations period for "an action for relief not otherwise provided for by law," Utah Code Ann. ? 78-12-25(2).

A. Background.

The TECA has addressed but not clearly resolved the question in point. In Ashland Oil Co. of California v. Union Oil Co. of California (1977) the TECA stated that the federal court selecting a state statute of limitations would "accept the state court interpretations of the state's limitations statute, but the nature of the claims presented will be determined by federal law...." 567 F.2d at 990 (citations omitted). Analyzing the nature of the claim, the court acknowledged ? 210's dual purpose of providing "both remedy for and deterrence against the violation of pricing regulations," id., but laid emphasis on its deterrent value, citing to portions of the Congressional Record.⁸ The TECA pointed to the treble damage claim's requirement of "more stringent proof of additional elements than that warranting the award of merely compensatory relief," id., and in a footnote stated that:

Section 210 draws a clear distinction between remedial recovery of overcharges and treble damages for intentional violations in the nature of a penalty beyond compensation; and for each claim there is specified a prerequisite not applicable to the other. See Manning v. Univ. of Notre Dame Du Lac, 484 F.2d 501 (TECA 1973).

567 F.2d at 990 n. 12. After this brief analysis, the Ashland court characterized the federal nature of the action as one for a "penalty."⁹

The TECA then considered the applicability of a California statute of limitation for actions "upon a statute for a penalty or forfeiture," examining California court interpretations of "penalty" as used in their statutes of limitation. The TECA determined that under California law "actions for damages beyond or without reference to actual loss" were actions for a "penalty or forfeiture," id. at 991, and finding that the treble damages claim fit within this definition, id., applied the penalty statute to bar the plaintiff's ESA claim.

Ten years later, in Carbone v. Gulf Oil Corp., 812 F.2d 1416 (1987), the TECA analyzed the nature of the actual damage claim "in keeping with the policy underlying creation of the federal statutory action," id. at 1421. Based on legislative history, the court identified dual purposes of deterrence and compensation underlying ? 210 actual damage claims, id. The court determined, however, that the basic nature of the actual damage claim was compensatory, stating:

The authority to award treble damages, if in the action for damages under Section 210 the overcharge is willful, does not change the compensatory nature of the basic federal statutory action for the single amount of the overcharge under Section 210 to an action for a civil penalty....

812 F.2d at 1421 (emphasis added).

The TECA refused to rule on the nature of the treble damage claim and remanded that issue with a directive to the lower court to determine the issue in light of the federal policies discussed in Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1984), and the antitrust cases cited by the Wilson Court in footnote 19.¹⁰ Although Carbone did not expressly overrule Ashland, it clearly indicated the TECA's discomfort with the earlier ruling. We now examine the Wilson decision and the antitrust cases cited therein.

In Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1984), the United States Supreme Court characterized actions under 42 U.S.C. ? 1983 for the purpose of borrowing an appropriate state statute of limitations. Such characterizations are to be "derived from the elements of the cause of action, and Congress' purpose in providing it," id. at 269, 105 S.Ct. at 1943, and are "ultimately a question of federal law," id. at 270, 105 S.Ct. at 1944.¹¹

Expounding on this "federal law" approach, the Wilson Court approvingly cited "better reasoned authority" which had treated statute of limitation questions in the antitrust treble damage area "as a matter of federal law":

The problem we address today often arose in treble-damages litigation under the anti-trust laws before Congress enacted a federal statute of limitations.... The question whether antitrust claims were more analogous to penal claims or to claims arising in tort, contract, or on a statute, was treated as a matter of federal law by the better reasoned authority. See e.g. Moviecolor Limited v. Eastman Kodak Co., 288 F.2d 80, 83 (CA2) cert. denied, 368 U.S. 821 82 S.Ct. 39, 7 L.Ed.2d 26 (1961); Fulton v. Loew's, Inc. 114 F.Supp. 676, 678-682 (Kan.1953); Electric Theater Co. v. Twentieth Century-Fox Film Corp., 113 F.Supp. 937, 941-942, (WD Mo.1953); Wolf Sales Co. v. Rudolph Wurlitzer Co., 105 F.Supp. 506, 509 (Colo.1952).

Wilson, 471 U.S. at 269 n. 19, 105 S.Ct. at 1943 n. 19....