US Oil Co., Inc. v. Koch Refining Co.

• Decision Date: 08 September 1980
• Docket Number: No. 79-C-659.,79-C-659.
• Citation: 497 F. Supp. 1125
• Parties: U. S. OIL COMPANY, INC., Plaintiff, v. KOCH REFINING CO., Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

497 F. Supp. 1125

U. S. OIL COMPANY, INC., Plaintiff, v. KOCH REFINING CO., Defendant.

No. 79-C-659.

United States District Court, E. D. Wisconsin.

September 8, 1980.

COPYRIGHT MATERIAL OMITTED

William H. Bode, Alfred Lawrence Toombs, John E. Varnum, Batzell, Nunn & Bode, Washington, D. C., Gilbert W. Church, Foley & Lardner, Milwaukee, Wis., for plaintiff.

Wayne E. Babler, Jr., Quarles & Brady, Milwaukee, Wis., for defendant.

MEMORANDUM AND ORDER

WARREN, District Judge.

This is an action for monetary, injunctive, and declaratory relief under the Emergency Petroleum Allocation Act of 1973, 15 U.S.C. § 751, et al., (EPAA) and the Economic Stabilization Act of 1970 (as amended) (ESA). Plaintiff, U. S. Oil Company, Inc., is a non-branded independent marketer of petroleum products located in Combined Locks, Wisconsin. Plaintiff sells gasoline to small independent marketers and through its own service stations in Wisconsin. In addition, it furnishes No. 1 and No. 2 fuel oil to almost 5,000 establishments in the state. U.S. Oil purchases these petroleum products from the defendant, Koch Refining Co., in vast quantities. The defendant is an oil refiner based in Wichita, Kansas, with a refinery near Minneapolis, Minnesota. Plaintiff and defendant have been doing business since 1973. On December 28, 1978, counsel for the plaintiff made a claim upon the defendant for $2,128,800.00 in alleged overcharges for gasoline and numbers 1 and 2 fuel oil. After waiting the required 90 days for payment, the plaintiff, on August 20, 1979, filed this action seeking recovery for the overcharges as well as declaratory and injunctive relief.

After answering the complaint, defendant filed seven separate motions, as well as a request for a special briefing schedule. The Court granted defendant's motion for a special briefing schedule and the motions were ready for resolution in February of this year. This case, however, had been transferred to Judge Evans when he assumed his judgeship. Upon review of the file he determined that, due to family ties, he had to recuse himself. The case was then reassigned to this Court and, subsequently, the Court granted plaintiff leave to submit additional materials to which defendant has responded. Now, almost a year later, these motions will be resolved.

MOTION TO STAY THE PROCEEDINGS

Defendant's primary motion is a motion to stay these proceedings pending the resolution of Coastal States Gas Corporation v. Schlesinger, Secretary of Energy, C.A. No. 78-549 (D.Del.1978), and Mobil Oil Corp. v. Dept. of Energy, 79-CV-11 (N.D. N.Y.1979). Plaintiffs in both these actions are seeking declaratory judgments regarding the validity of the equal application or fictitious recovery rule. 10 CFR § 212.83(h). This rule, according to Koch, is a vital element in the determination of the maximum allowable price as it relates to recovery of cost increases incurred but not included in a price until subsequent months and the allocation of such carried forward or banked costs. Defendant contends that if these actions are resolved in favor of the plaintiffs in those actions, it will dispose of most of U.S. Oil's claims here. Furthermore, defendant states that it has raised these same issues in its pleadings.

Defendant argues that a stay is appropriate in this action for three reasons. First, it contends that the issues are so complex and the regulations so incomprehensible that this Court, before proceeding, should have the benefit of the decisions in these other cases. See Landis v. North American Co., 299 U.S. 248, 254-55, 57 S.Ct. 163, 165-66, 81 L.Ed. 153 (1936). Second, the defendant alleges that the plaintiff is forcing it to conduct an extensive audit of its entire records for the last seven years. If these declaratory judgment actions are resolved in defendant's favor, defendant contends that it will have needlessly expended enormous amounts of time and money conducting the audit. Third, the defendant asserts that a stay would be in the interest of judicial economy because the Court would not have to resolve the validity of defendant's affirmative defenses or many complex discovery motions.

In response, plaintiff argues that the motion should be denied because no one knows when these cases will be resolved or their outcome. Further, whatever the result, plaintiff correctly points out, these decisions will not be binding on this Court. Moreover, plaintiff argues that they stand in the shoes of the public because Congress created a private right of action to enforce the price controls and, therefore, a delay would injure the public interest in insuring compliance with these regulations. Finally, plaintiff contends that the motion is sought for delay.

It is within the Court's inherent discretionary power to grant a stay of this action. Landis v. North American Co., supra. This discretionary power, however, cannot be exercised without a careful balancing of the potential harms and benefits to each party. In this case, the Court finds that the balancing of potential harm weighs in favor of denying the request for a stay. The Court would note that it has been close to a year since plaintiff commenced this action and it has not advanced beyond the joining of the issues. In effect, therefore, defendant has had a one-year stay already. Furthermore, there is at this time no indication that the Coastal or Mobil cases are near resolution. Nor is there any assurance that these cases will not settle as another very similar one which defendant relied on previously has done so. See Cities Services Company v. Schlesinger, Secretary of Energy, Civ.No. 78-550 (D.Del.); 44 Fed.Reg. 64486 (Nov. 7, 1979); 44 Fed.Reg. 75233 (Dec. 19, 1979) (Notice of settlement). Moreover, even if these cases were decided in defendant's favor, those decisions would not bind this Court and U.S. Oil would be entitled to litigate the issue anew as would defendant if a contrary decision was rendered. Although the Court would have the benefit of these other decisions, it would still have to make its own independent decision on the law. Therefore, notwithstanding the assistance the Court would gain from the other court's views on the law, there is no compelling reason to await their decision. While the Court recognizes that defendant may incur great expense in conducting the audit that plaintiff has apparently requested, the Court does not believe that this is any justification for a stay. Finally, although the Court would not equate the plaintiff with the government or with the public at large, the Court would opine that Congress has provided it with a remedy for alleged overcharges and it is entitled to pursue that remedy. Therefore, the Court must resolve this dispute as quickly as possible. Contrary to defendant's allegations, a stay would not be in the interest of justice or judicial economy.

MOTION TO STAY OR DISMISS BASED ON THEORY OF PRIMARY JURISDICTION

Defendant requests that the Court dismiss this action or grant a stay pending the outcome of the Department of Energy's (DOE) full scale audit of its books and records. Defendant argues that in view of the complex and intricate nature of the regulations, this Court should invoke the judicially-created doctrine of primary jurisdiction and either stay or dismiss this action pending the completion of the D.O.E. audit. See Far East Conference v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952); Texas and Pacific Railway v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553 (1907); Interstate Commerce Commission v. All-American, Inc., 505 F.2d 1360, 1362-63 (7th Cir. 1974).

Under the doctrine of primary jurisdiction, the Court must determine whether it will stay its hand in a particular matter until an administrative agency considering the same issue makes its ruling. Interstate Commerce Commission v. All-American, Inc., 505 F.2d at 1362. The doctrine as developed by the Supreme Court recognizes the need for cooperation between the federal courts and the administrative agencies in areas where there jurisdiction overlaps. The rule also recognizes that where a case "raises issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, administrative agencies created by Congress for regulating the subject matter should not be passed over." Far East Conference v. United States, 342 U.S. at 574, 72 S.Ct. at 494. Only where a question is within the special competency of an administrative body should the court await the agency's decision. United States v. Western Pacific Railroad Co., 352 U.S. 59, 64-65, 77 S.Ct. 161, 165-66, 1 L.Ed.2d 126 (1956). In determining whether to apply this doctrine, the Court must ascertain "whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application." Id.

Defendant argues that the regulations are so complex that the Court needs the benefit of the D.O.E.'s findings before it can determine whether the plaintiff was overcharged. Longview Refining Co. v. Shore, 554 F.2d 1006 (Em.App.) cert. denied, Shore v. Longview Refining Co., 434 U.S. 836, 98 S.Ct. 126, 54 L.Ed.2d 98 (1977). In support of its position, defendant cites a number of cases where the courts have invoked the doctrine of primary jurisdiction in similar instances. See Orange & Rockland Utilities, Inc. v. Howard Oil Co., 416 F.Supp. 460 (S.D.N.Y.1976); Eastern Airlines, Inc. v. Mobil Oil Corp., 403 F.Supp. 757 (S.D.Fla.1975); Evanson v. Union Oil Company of California, Civ.No. 4-75-CIV671 (D.Minn.1976). Plaintiff in response, alleges that the issue involved in this case does not require the Court to interpret the D.O.E.'s regulations but rather only to apply those regulations to the facts and determine if there was an overcharge. This determination, plaintiff contends, is one which is uniquely suited to the federal courts because it is...