Smith v. Mobil Oil Corp.

• Decision Date: 24 July 1987
• Docket Number: 75-399-CV-W-0 and 75-682-CV-W-0.,75-398-CV-W-0,Civ. A. No. 74-585-CV-W-0
• Parties: Terry SMITH, et al., Plaintiffs, v. MOBIL OIL CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Missouri

667 F. Supp. 1314

Terry SMITH, et al., Plaintiffs, v. MOBIL OIL CORPORATION, Defendant.

Civ. A. Nos. 74-585-CV-W-0; 75-398-CV-W-0; 75-399-CV-W-0 and 75-682-CV-W-0.

United States District Court, W.D. Missouri, W.D.

July 24, 1987.

COPYRIGHT MATERIAL OMITTED

George M. Bock, Slagle & Bernard, Kansas City, Mo., for plaintiffs.

R. Lawrence Ward, John M. Kilroy, Jr., Shughart, Thomson & Kilroy, Kansas City, Mo., Andrew J. Kilcarr, Donovan, Leisure, Newton & Irvine, Brian Harvey, Office of Mobil General Counsel, New York City, for defendant.

MEMORANDUM OPINION AND ORDER

STEVENS, District Judge.

Plaintiffs, in their own behalf and as representatives of a class of former gasoline service station operators who leased their premises from Mobil Oil Corporation ("Mobil"), allege that Mobil has engaged in tying arrangements in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 3 of the Clayton Act, 15 U.S.C. § 14. Before the court is Mobil's motion for summary judgment on all of the plaintiffs' claims, and the plaintiffs' cross-motion for partial summary judgment on the issue of whether the "Mobil franchise package," (the alleged "tying" item) is something separate from the alleged "tied items," (gasoline, motor oil and tires, batteries, accessories and specialties, the latter four items being referred to collectively as "TBAS").

For the reasons stated below, the court grants summary judgment in Mobil's favor with respect to all the plaintiffs' claims. The plaintiffs' cross-motion for partial summary judgment, of course, is denied.

I. Statement of the Case

A tying arrangement is characterized by a seller's refusal to sell one product except on the condition that the buyer also purchase a second product. The first product is called the "tying" product; the second the "tied" product. See Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5-6, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958). According to traditional analysis, in order to establish a tying arrangement which violates Section 1 of the Sherman Act, plaintiffs must prove: (1) that the alleged tying and tied items are separate products; (2) that the seller has sufficient economic power with respect to the tying item to coerce purchase of the tied product; and (3) that the amount of affected interstate commerce in the tied product market is not insubstantial.¹ See Rosebrough Monument Co. v. Memorial Park Cemetery Ass'n., 666 F.2d 1130 (8th Cir.1981) cert. denied, 457 U.S. 1111, 102 S.Ct. 2915, 73 L.Ed.2d 1321 (1982); Northern v. McGraw Edison Co., 542 F.2d 1336, 1344-45 (8th Cir.1976) cert. denied, 429 U.S. 1097, 97 S.Ct. 1115, 51 L.Ed.2d 544 (1977). As the Supreme Court recently explained:

The essential characteristic of an invalid tying arrangement lies in the seller's exploitation of its control over the tying product to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms. When such "forcing" is present, competition on the merits in the market for the tied item is restrained and the Sherman Act is violated.

Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2, 12, 104 S.Ct. 1551, 1558, 80 L.Ed.2d 2 (1984).

Central to the plaintiffs' tying claim is their definition of the "Mobil franchise package" — the alleged tying product:

"Mobil franchise package" means the right to use and display the name "Mobil" and other "Mobil trademarks," as defined, in connection with the operation of a retail service station business, including the right to use signs and service station equipment or fixtures displaying the name "Mobil" and other "Mobil trademarks" as defined, and the right to occupy and operate a service station premises displaying the name "Mobil" together with the right to receive from Mobil Oil Corporation materials (including the Mobil credit card system and imprinter, instruction manuals, handbooks, management records and other goods and commodities), suggestions and advice relating to the operation of a service station.

Plaintiffs claim that Mobil used economic power which it allegedly had with respect to the "Mobil franchise package," to compel plaintiffs, as a condition to obtaining that "package," to purchase from Mobil all the gasoline, oil and TBAS offered for sale from the plaintiffs' service stations. Plaintiffs argue that Mobil's act in thus "forcing" them to buy gasoline, motor oil and TBAS exclusively from Mobil significantly foreclosed competition in the wholesale markets for those items, and that plaintiffs were compelled to purchase the tied products at prices in excess of fair market value.

Concerning the plaintiffs' gasoline tying claim, Mobil argues that the plaintiffs' tying product is not the putative "Mobil franchise package," but simply Mobil's trademark. Proceeding from that premise, Mobil argues that its trademark is not a product separate from its gasoline, and thus that the two are incapable of being tied.²

Concerning the plaintiffs' TBAS and motor oil tying claims, Mobil asserts that an essential element of those claims is that Mobil "coerced" plaintiffs to purchase only Mobil products. Mobil argues that plaintiffs compromised their ability to prove coercion during class certification proceedings, when counsel for the plaintiffs agreed to prove the oil and TBAS claims using only the terms of uniform contracts and leases between the parties (and Mobil's uniform policies as reflected in the uniform agreements), which, by Mobil's account, contain nothing that forced any class member to buy TBAS or oil as a condition to obtaining a Mobil franchise. Mobil also argues that the plaintiffs' oil tying claim is not a tying claim at all, but rather a challenge to the legality of Mobil's vertical distribution system for oil.

The plaintiffs' cross-motion for summary judgment asks that the court recognize the separate nature of the "Mobil franchise package" and the alleged tied items. Plaintiffs also argue, however, that insofar as the court determines that plaintiffs are actually depending on Mobil's trademark as a tying item, the court should find that the Mobil trademark is separate from the gasoline Mobil sold plaintiffs.

II. The Summary Judgment Standard

Under Rule 56(c), Fed.R.Civ.P., summary judgment is appropriate if the moving party shows there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The moving party bears the burden of proof. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). Once the movant properly supports a motion for summary judgment, however, an adverse party may not rest on the mere allegations of his pleading, but must set forth by affidavit or otherwise specific facts showing there is a genuine issue for trial. Fed.R.Civ.P. 56(e). See Celotex Corp. v. Catrett, 477 U.S. 317, ___-___, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265, 273-74 (1986).

Traditionally, summary judgment on the merits in antitrust actions has not been favored. See Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). However, the Supreme Court has approved the use of summary judgment in antitrust cases more recently on several occasions. See Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, ___, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538, 552 (1986); Northwest Wholesale Stationers, Inc. v. Pacific Stationery, 472 U.S. 284, 297-98, 105 S.Ct. 2613, 2621, 86 L.Ed.2d 202 (1985); Arizona v. Maricopa County Medical Society, 457 U.S. 332, 339, 102 S.Ct. 2466, 2470, 73 L.Ed.2d 48 (1982), and as the Eighth Circuit has long recognized: "where there has been ample opportunity for discovery, summary judgment is appropriate in antitrust litigation, just as in any other litigation, upon a showing by the movant of an absence of any genuine issue of material fact." Willmar Poultry Co. v. Morton-Norwich Products, Inc., 520 F.2d 289, 293 (8th Cir.1975), cert. denied, 424 U.S. 915, 96 S.Ct. 1116, 47 L.Ed.2d 320 (1976) (citations omitted); see also Rice v. Mobil Oil Corp., 1980-2 Trade Cases (CCH) ¶ 63,355 at 75,805 (W.D.Mo.1980).

This action has been pending since 1975. On September 24, 1982, after seven years of discovery directed at the so-called "class certification issue," though by the nature of the beast including some "merit discovery," Judge John R. Gibson certified the matter as a class action. Shortly thereafter, on December 2, 1982, Mobil filed its motion for summary judgment. The interim between Mobil's filing the motion and the present date has seen much additional discovery and briefing directed toward the issues raised by Mobil's summary judgment motion. The discovery plaintiffs have undertaken since Mobil filed its motion has given them a fair opportunity to discover facts to oppose Mobil's motion. In short, Mobil's motion for summary judgment is now ripe for resolution.

III. Undisputed, Uncontroverted and Stipulated Facts

Given the posture of the case it seems appropriate at the outset to set forth those facts on which this disposition is based.

As previously mentioned, in the hearing on the class certification issue held before Judge Gibson, counsel for the plaintiffs stipulated that in pursuing their tying claims as a class, plaintiffs would rely solely on the content of the standard contracts and leases entered into between the parties, and uniform policies as reflected in those agreements. Judge Gibson explicitly relied on that stipulation in finding that questions of law or fact common to the members of plaintiffs' class predominate over questions affecting only individual members. Before the court are copies of agreements entered into between Mobil and the plaintiffs' class representatives.

Those materials reveal that Mobil dealers obtained what plaintiffs have defined as the "Mobil franchise package" by entering into the...