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SOUTH END OIL COMPANY v. TEXACO

January 19, 1965

SOUTH END OIL COMPANY, INC., PLAINTIFF,
v.
TEXACO, INC., DEFENDANT.



The opinion of the court was delivered by: Will, District Judge.

This action arises out of defendant Texaco's decision not to renew its distributorship contract with plaintiff South End Oil Company, Inc. (South End) and its refusal to sell to the plaintiff thereafter, except on the less favorable terms offered "consumer" accounts. At the time of termination, South End owed Texaco approximately $14,000, for which Texaco subsequently filed suit in the state courts and secured a judgment.

South End's complaint is based on §§ 1 and 2 of the Sherman Act, 15 U.S.C. § 1 & 2 and § 2(a) of the Clayton Act, 15 U.S.C. § 13(a). Plaintiff seeks recovery of treble damages alleging the following violations by Texaco:

(1) restricting and attempting to restrict sales by South End to certain of its customers who resold Texaco products at discount prices;

(2) controlling or attempting to control South End's prices;

(3) compelling or attempting to compel South End to dictate the retail price at which its customers resold Texaco products; and

(4) seeking a monopoly in its (Texaco's) products in the area in which South End made its sales.

Plaintiff alleges that Texaco, in pursuit of these goals, limited the quantities of oil it would sell to South End; delayed delivery of products to South End; refused to sell products to South End; and, finally, terminated the distributorship contract. In addition, South End claims that Texaco unlawfully discriminated in price between it and its competitors (a) with respect to sales made prior to the termination of the contract and (b) with respect to proposed sales after the termination.

Texaco has moved for summary judgment, basing its motion on the depositions of plaintiff's president (Eustace) and auditor (Toomire), as well as its own sworn answers to the interrogatories posed by the plaintiff.

The Court rarely is disposed to grant a motion for summary judgment where there are substantial issues of fact raised by the pleadings. The instant case is exceptional since an examination of the pleadings, the lengthy depositions and the defendant's sworn answers to interrogatories reveal uncontroverted facts which warrant and require the granting of the motion.

Having fully considered these voluminous materials and the uncontroverted facts contained therein, we find (1) that the price-discrimination charge is without any basis and (2) that the facts — viewed in the light most favorable to the plaintiff — are in no way susceptible of an interpretation which would bring Texaco's conduct within the penumbra of the antitrust laws. Specifically, we find that Texaco acted unilaterally at all times; that its actions were neither part of a pre-existing conspiracy nor directed toward the formation of an illegal conspiracy; that it was motivated wholly by South End's failure to develop as a balanced "full-line" distributor and its poor financial condition; and that there is no evidence which even suggests the possibility that Texaco was attempting to secure a monopoly or that it was engaging in conduct which might raise a question under § 2 of the Sherman Act. The facts and case law supporting these findings and conclusions are set out below.

I

The Alleged Price Discrimination

Plaintiff makes two allegations of price discrimination. The first, alleging sales to competitors at lower prices during the distributorship period, is admittedly based on hearsay and the intuition of plaintiff's president. Eustace states that he "heard" that Lambie and Rasmussen (a competing Texaco distributor) was being given an additional five per cent discount. He states that a second distributor told him that he "thought" that South End could not purchase Texaco oil as cheaply as he could. Finally, Eustace relates that competitive Texaco distributors made sales to "his" accounts. Assuming that a change in consumer allegiance could only have been occasioned by a lower price, he infers that his competitors were purchasing on more advantageous terms.

Responding to this charge, Texaco has filed data culled from its sales records, showing all purchases by distributors identified by South End as its competitors, the amounts purchased and the price charged. This information is included in Texaco's answers to plaintiff's interrogatories and is sworn to be a complete and accurate résumé of the company's ...


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