USA Rookwood Corp. v. Atlantic Richfield Co.

• Decision Date: 26 September 1989
• Docket Number: C-2-83-0293.,No. 6-39,6-39
• Citation: 888 F.2d 846
• Parties: USA ROOKWOOD CORPORATION, Plaintiff-Appellant, v. ATLANTIC RICHFIELD COMPANY, Defendant-Appellee.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

888 F.2d 846

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

Nos. 6-39, C-2-83-0293.

Temporary Emergency Court of Appeals.

Argued May 25, 1989.

Decided September 26, 1989.

Lawrence D. Walker, Taft, Stettinius, and Hollister, Cincinnati, Ohio, was on the brief, for plaintiff-appellant.

David L. Roll, Alfred M. Mamlet, Steptoe and Johnson, Washington, D.C., and Richard C. Morse and Michael B. Green, Atlantic Richfield Co., Los Angeles, Cal., were on the brief, for defendant-appellee.

Before GRANT, PECK, and BROWN, Judges.

WESLEY E. BROWN, Judge.

This case arises under Section 210 of the Economic Stabilization Act of 1970, 12 U.S.C. Sec. 1904 note. Plaintiff-Appellant Rookwood appeals a judgment entered in favor of the Atlantic Richfield Company ("ARCO"). Rookwood's complaint alleged that ARCO overcharged two firms owned by Rookwood, Houston Oil Company ("HOC") and Oil Transit, Inc. ("OTI"), on sales of motor gasoline from 1977 to 1981. In a series of orders, the district court granted summary judgment on the five claims alleged in Rookwood's complaint. The district court found that four of the claims were barred by the applicable statute of limitations and that there was no genuine issue of fact on the fifth claim. For the reasons set forth herein, we affirm.

I. Background

In order to address the issues raised on appeal, we first review the basic structure of the Mandatory Petroleum Price Regulations ("MPPR"), 10 C.F.R. Part 212, as they applied to refiners.¹ Under the regulations, refiners such as ARCO could not sell covered products to purchasers at a price in excess of the "maximum allowable price." The determination of a maximum price was made with respect to each class of similar purchasers. The maximum allowable price consisted of two components: the weighted average price of the covered product on May 15, 1973, together with certain increased costs to the refiner since May, 1973. Thus, a refiner could generally raise the sales price of its products above the May 15, 1973 price to the extent that the refiner had incurred increased costs. If a refiner did not recoup all of its increased costs through sales in a given month, the regulations allowed the refiner, subject to certain limitations, to "bank" unrecovered costs and recoup them through sales in subsequent months. 10 C.F.R. Sec. 212.83.

Rookwood's amended complaint in this case alleged that the following acts of ARCO resulted in overcharges: (i) ARCO's failure to use actual May 15, 1973 transaction prices and otherwise improper computation of weighted average prices for the motor gasoline which it sold to OTI and HOC on May 15, 1973; (ii) ARCO's failure to place OTI and HOC in the same class of purchaser as similar purchasers of motor gasoline; (iii) ARCO's failure to preserve customary price differentials; (iv) ARCO's failure to comply with the Refiner Price Rules in calculating increased product costs and increased nonproduct costs which could be added to May 15, 1973 selling prices to determine maximum allowable prices; and (v) ARCO's violations of the deemed recovery rule.

Rookwood raises three issues on appeal: (1) whether the district court erred by holding that Rookwood's "base price" and "deemed recovery" claims were barred by the statute of limitations; (2) whether the court improperly "split" a single cause of action into several mini-causes of action in applying the statute of limitations; and (3) whether the district court erred in granting summary judgment on Rookwood's increased costs claim (referred to as the "No. 2 distillate claim").

II. Statute of Limitations

The parties stipulated in the district court that the proper statute of limitations in this case was Sec. 2305.07 of the Ohio Revised Code, which provides for a limitations period of six years. Rookwood's complaint was filed in February of 1983, meaning that any claims accruing prior to February 1977 were barred by the statute.² After examining the nature of Rookwood's claims, the district court found that all of Rookwood's claims except one had accrued before February of 1977. We find that the district court's handling of Rookwood's claims was correct.

Rookwood first argues that, notwithstanding the fact that overcharging commenced on its claims prior to 1977, it is entitled to recover for all overcharges occurring within the limitations period. At the core of this argument is the contention that each alleged overcharge by ARCO constituted a separate and independent cause of action. Rookwood's theory has been dubbed a "continuing violation theory" and has been repeatedly rejected by this court. In Western Mountain Oil, Inc. v. Gulf Oil Corp., 726 F.2d 765 (Temp.Emer.Ct.App. 1983), in which the plaintiff alleged overcharges due to an improper purchaser classification, the court summarized the plaintiff's argument as follows:

Plaintiff argues that it was overcharged each time it purchased petroleum products from Gulf during the years in question, and that each sale amounted to a violation of the pricing regulations. Western Mountain therefore contends that each sale gave rise to a separate cause of action. Under this theory, the three-year statute of limitations would bar recovery of only those unintentional overcharges occurring more than three years prior to the filing of its complaint....

Id. at 767. We rejected this theory, finding that Western Mountain had but a single cause of action based on Gulf's improper classification and that the cause of action accrued on the date that overcharging commenced as a result of the misclassification. Id. at 768. See also Fleetwing Corp. v. Mobil Oil Corp., 726 F.2d 768 (Temp.Emer. Ct.App.1983). A similar argument was also made in Gulf Oil Corp. v. Dyke, 734 F.2d 797 (Temp.Emer.Ct.App.1984), cert. denied, 469 U.S. 852, 105 S.Ct. 173, 83 L.Ed.2d 108, where the alleged violation was an improperly calculated May 15, 1973 selling price. We again found that any claim for overcharges was barred by the statute of limitations, noting that "in such a case as this, where any overcharges incurred resulted from an initial improper base price, the statute of limitations begins to run from the date of the first overcharge." Id. at 809. In the instant case, ARCO presented uncontested evidence to the district court that if Rookwood's contentions were true, overcharges would have resulted well before February 1977— which was the "cut-off" date for statute of limitations purposes. As to Rookwood's base price and class of purchaser claims, then, Western Mountain and Gulf Oil clearly mandate a finding that such claims are barred by the statute of limitations.

In addition to the foregoing claims, the district court ruled that Rookwood's claim that ARCO violated the deemed recovery rule, 10 C.F.R. Sec. 212.83(h) (1979), was also barred by the statute of limitations. We find that the district court's ruling on this issue was a correct application of the rule set forth in Go-Tane Service Stations v. Clark Oil & Refining, 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.

On prior occasions, this court has examined the effect of the deemed recovery rule:

Under the deemed recovery rule ... the refiner had to pass through increased product costs uniformly among all classes of purchasers or suffer a cost recovery penalty. Specifically, each month the refiner was required to compute its banks of unrecovered costs as though it had charged all classes of purchaser the largest increment of increased costs it charged to any one class of purchaser, even though, in fact, it did not. If a refiner applied increased costs unequally, thus, it had to reduce its bank of previously unrecouped costs by an amount that was larger than the amount of increased costs actually recouped. The refiner, that is, was "deemed" to have recovered costs it, in fact, did not.

Mobil Oil Corp. v. Department of Energy, 728 F.2d 1477 (Temp.Emer.Ct.App.1983), cert. denied, 467 U.S. 1255, 104 S.Ct. 3545, 82 L.Ed.2d 849 (1984).

The record before us indicates that in 1975 ARCO established a uniform pricing system under which all of ARCO's prices were set by a central pricing authority. In order to monitor compliance with this system, ARCO developed a computer program to determine whether prices set by ARCO's pricing authority were the same as the prices set forth in customer invoices. Whenever these two prices did not match, a "sales exception report" was printed out detailing the difference. In determining the cost increments on its prices under the MPPR and in calculating the resulting cost banks, ARCO apparently used those prices issued by its pricing authority rather than the prices that were reflected in the sale exception reports. Rookwood argues that this method of calculating cost banks violated the deemed recovery rule and resulted in the overstatement of ARCO's banks by hundreds of millions of dollars.³

In Go-Tane Service Stations v. Clark Oil & Refining, 798 F.2d 481 (Temp.Emer. Ct.App.1986), we stated that the statute of limitations "begins to run when an act with decisive continuing effect causes initial injury at a given time, and the statute is not tolled with respect to continued injury of similar character following from the same act." Id. at 484. In this case, the district court correctly concluded that ARCO's implementation of its method of computing recovered costs constituted the requisite act with decisive continuing effect for purposes of the statute of limitations. It is apparent that this pricing practice was adopted by ARCO in 1975 and, if plaintiff's allegations are correct, resulted in overcharges to Rookwood shortly thereafter. The situation here is analogous to Western Mountain, where continuing overcharges resulted from the refiner's initially improper class of purchaser determination. The source of the injury in the present case, the overstatement...