USA Petroleum Co. v. Atlantic Richfield Co.

• Decision Date: 06 January 1994
• Docket Number: No. 87-5681,87-5681
• Citation: 13 F.3d 1276
• Parties: , 1993-2 Trade Cases P 70,458 USA PETROLEUM COMPANY, Plaintiff-Appellant, v. ATLANTIC RICHFIELD COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1276

13 F.3d 1276

62 USLW 2466, 1993-2 Trade Cases P 70,458

USA PETROLEUM COMPANY, Plaintiff-Appellant, v. ATLANTIC RICHFIELD COMPANY, Defendant-Appellee.

No. 87-5681.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 16, 1992.

Filed Aug. 12, 1992.

Withdrawn from Submission March 17, 1993.

Resubmitted July 7, 1993.

Opinion Withdrawn Jan. 6, 1994.

Order and Opinion Decided Jan. 6, 1994.

Alicia Rosenberg, Blecher & Collins, Los Angeles, CA, for plaintiff-appellant.

Ronald Redcay, Arnold & Porter, Los Angeles, CA, for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before: ALARCON, NELSON, and REINHARDT, Circuit Judges.

ORDER

The Petition for Rehearing is granted. The opinion filed on August 12, 1992, is hereby withdrawn and the following opinion substituted in its place. The suggestion for reconsideration en banc is therefore moot.

OPINION

D.W. NELSON, Circuit Judge:

Atlantic Richfield Co. ("ARCO") is one of the "major" oil companies; USA Petroleum Co. ("USA") is an "independent" gasoline marketer. USA alleged that ARCO and its dealers conspired to drive USA and other independents out of the retail gasoline market by agreeing to set retail gasoline prices "below market levels" and contends that this vertical agreement to fix maximum resale prices violates section 1 of the Sherman Act, 15 U.S.C. Sec. 1.

USA appealed from the decision of the district court granting summary judgment in favor of defendant ARCO on the antitrust claims. We reversed, holding that USA had standing to challenge ARCO's alleged vertical maximum resale price maintenance scheme. See USA Petroleum v. Atlantic Richfield Co., 859 F.2d 687, 697 (9th Cir.1988). The Supreme Court in turn reversed the judgment of this court, holding that a competitor does not have standing to challenge such a scheme unless it amounts to "predatory pricing." Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 339, 110 S.Ct. 1884, 1891, 109 L.Ed.2d 333 (1990). On remand, USA argues that the grant of summary judgment still must be reversed on the alternative ground that the district court wrongly dismissed USA's Sherman Act section 1 claims. We disagree, and now affirm the judgment of the district court.

I. Factual and Procedural Background

USA filed this antitrust action in 1983, alleging that ARCO had agreed with its independent dealers to set below-market prices in the retail gasoline market in an effort to drive independent producers like USA out of business. USA alleged that ARCO's conduct violated the antitrust laws in two ways. First, USA asserted that an agreement to set maximum resale prices is illegal per se under section 1 of the Sherman Act. Second, USA alleged that ARCO's prices were "predatory" and constituted an attempt to monopolize in violation of section 2 of the Sherman Act, 15 U.S.C. Sec. 2. On April 28, 1986, USA voluntarily dismissed its section 2 attempted monopolization claim because it could not show the "dangerous probability of success" necessary to prevail on that claim. USA, however, continued to press its section 1 claim.

On June 30, 1986, ARCO moved for partial summary judgment on USA's section 1 claim. ARCO offered two arguments in support of this motion. First, it argued that USA had no standing to assert the claim because USA could not suffer antitrust injury from a conspiracy to set maximum prices unless those prices were predatory. Second, ARCO argued that USA could not prove that ARCO's prices were predatory because USA could not show a dangerous probability of successful monopolization. USA responded to the motion for summary judgment by asserting that it did not need to show antitrust injury or, in the alternative, that predatory pricing under Sherman Act section 1 did not require a dangerous probability of success. The district court granted ARCO's motion for summary judgment. It held that, "[e]ven assuming that [USA] can establish a vertical conspiracy to maintain low prices, [it] cannot satisfy the 'antitrust injury' requirement of Clayton Act Sec. 4, without showing such prices to be predatory." The court reasoned that USA could not show that ARCO's prices were predatory because ARCO did not possess sufficient market power and therefore was unlikely to succeed in monopolizing the market.

We reversed the district court. We held that USA did have standing to challenge a conspiracy to set maximum prices under section 1. See USA Petroleum, 859 F.2d at 689. Because we found antitrust injury based on the per se illegality of a conspiracy to fix maximum resale prices, we did not reach the issue of whether ARCO had engaged in predatory pricing. The Supreme Court in turn reversed. The Court held that "[a]lthough a vertical, maximum-price-fixing agreement is unlawful under Sec. 1 of the Sherman Act, it does not cause a competitor antitrust injury unless it results in predatory pricing. Atlantic Richfield, 495 U.S. at 339, 110 S.Ct. at 1891 (emphasis added). The Court then remanded the case to this court for "proceedings consistent with this opinion." Id. at 346, 110 S.Ct. at 1895.

II. Contentions of the Parties Upon Remand

USA now asserts that because the Supreme Court did not reach the question of whether the prices ARCO charged were predatory, see Atlantic Richfield, 495 U.S. at 333 n. 3, 110 S.Ct. at 1888 n. 3, this court should reexamine the district court's definition of predatory pricing. Specifically, USA contends that the Court's recent decision in Brook Group Ltd. v. Brown & Williamson Tobacco Corp., --- U.S. ----, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993), establishes that USA must show that ARCO engaged in "below-cost" pricing for which it had a "reasonable prospect ... of recouping" any losses suffered, id. at ----, 113 S.Ct. at 2588 (quoted in Appellant's 1993 Supp.Brief at 1, 5). Consequently, USA requests this court to remand the case for further discovery on these two issues.

ARCO, by contrast, asserts that USA abandoned its section 1 predatory pricing claims by failing to present any evidence of predatory pricing in opposition to ARCO's motion for summary judgment or, in the alternative, failed to contest the district court's definition of predatory pricing on appeal. ARCO further argues that the Supreme Court's decision in this case expressly decided that predatory pricing in the section 2 sense is a prerequisite for antitrust injury even if the claim is premised on section 1. Finally, ARCO contends that Brook Group is inapplicable because it only addressed the standard for substantive liability for primary-line price discrimination under Robinson-Patman Act Sec. 2(a) and did not disturb what ARCO views as the Supreme Court's clear mandate that section 2 predatory pricing standards should control. For these reasons, ARCO asserts that the district court should be affirmed.

Assuming arguendo that USA's characterization of the appropriate predatory pricing standard is correct, I nonetheless believe that USA would not be entitled to further discovery on the issue of below-cost pricing. Accordingly, the judgment of the district court must be affirmed.

III. Jurisdiction

Initially, we reject ARCO's various jurisdictional challenges. First, as discussed below, it is clear that USA did not abandon the issue of what constitutes the correct predatory pricing standard in the district court. Rather, the district court rejected USA's predatory pricing theory on its merits. Second, USA appeared to raise the issue of whether its section 1 predatory pricing standard was the proper one in its first appeal to this court. See Appellant's 1987 Opening Brief at 31-32 & n. 16. Even if USA did not adequately raise the issue in its opening brief, ARCO thoroughly discussed the question in its own brief, see Appellee's 1987 Brief at 35-44, which we believe would justify excusing the waiver, see, e.g., United States v. Ullah, 976 F.2d 509, 514 (9th Cir.1992); Eberle v. City of Anaheim, 901 F.2d 814, 818 (9th Cir.1990); International Union of Bricklayers & Allied Craftsman Local Union No. 20, AFL-CIO v. Martin JASKA, Inc., 752 F.2d 1401, 1404 n. 4 (9th Cir.1985). Finally, we reject the notion that the Supreme Court's decision in this case decided that section 2 predatory pricing standards should control. Noting that we had not reached the question of the proper definition of predatory pricing, the Court stated: "For the purposes of this case, we likewise assume that petitioner's prices were not predatory in nature," Atlantic Richfield, 495 U.S. at 333, n. 3 (emphasis added), 110 S.Ct. at 1888 n. 3; moreover, the Court noted that it "had no occasion ... to consider the proper definition of predatory pricing," id. at 341 n. 10, 110 S.Ct. at 1893 n. 10. Accordingly, the issue of the appropriate predatory pricing standard was adequately preserved to be considered at this stage of the proceedings.

IV. The Summary Judgment Standard

It is an established principle that an appellate court may affirm a lower court's grant of summary judgment on any basis supported by the record even if the lower court applied the incorrect legal standard. See Henry v. Gill Indus., Inc., 983 F.2d 943, 950 (9th Cir.1993); accord Diaz v. Am. Tel. & Tel., 752 F.2d 1356, 1362 (9th Cir.1985); cf. Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 157, 82 L.Ed. 224 (1937) ("[T]he rule is settled that if the decision below is correct, it must be affirmed, although the lower court relied upon a wrong ground or gave a wrong reason."). See generally 10 Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure Sec. 2716, at 658-60 & n. 16 (citing cases) (1983 & Supp.1992).

It is assumed that the district court applied the incorrect predatory pricing standard and that the appropriate one is, as USA contends, that articulated in Brook Group for section 2(a) of the Robinson-Patman Act: below cost pricing coupled with a reasonable prospect of recoupment....