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Mullis v. ARCO Petroleum Corp.

decided: August 5, 1974.


Appeal from U.S. District Court, Southern District of Indiana, Indianapolis Division.

Swygert, Chief Judge, and Stevens and Sprecher, Circuit Judges.

Author: Stevens


The question presented by this appeal is whether either the Robinson-Patman Act*fn1 or § 2 of the Sherman Act*fn2 protects a local jobber from an otherwise lawful termination at a time when, because of the existence of an acute shortage, he cannot find another source of supply.

Plaintiff has been a distributor of petroleum products for defendant, ARCO, or its predecessor, Sinclair, in Lawrence County, Indiana, and its environs for the past 20 years.*fn3 Notwithstanding occasional threats by plaintiff to take his patronage elsewhere, and notwithstanding various disputes which defendant emphasizes and plaintiff minimizes, nothing serious enough to cause a rupture in the business relationship occurred until shortly before the "energy crisis."

On February 15, 1973, defendant notified plaintiff that his distributorship was cancelled; the termination date, originally set for March 31, 1973, was extended to May 31, 1973.*fn4 Plaintiff canvassed some 20 other suppliers of petroleum products to obtain a new source, but none would agree to serve him. On May 7, 1973, he commenced this litigation. In his complaint plaintiff described his business, the receipt of the notice of cancellation and the current market situation, and alleged that ARCO's acts constituted "an attempt to monopolize the marketing area in which plaintiff operates," and resulted in discrimination against him. After an evidentiary hearing, the district court entered an order enjoining defendant from refusing to furnish petroleum products to the plaintiff until further order of court. Defendant appeals from that order.

There is no question about the sufficiency of plaintiff's proof of irreparable injury. His business, upon which he places a value of $500,000, involves the distribution of approximately 433,000 gallons of gas and 250,000 gallons of fuel oil per month. He services 20 retail gasoline stations, four of which he owns, and also supplies various governmental units, industrial customers and farms in and about Lawrence County, Indiana. Since he sells only ARCO petroleum products, and since he is unable to obtain a new supplier, it is reasonable to infer that termination of his distributorship will terminate his business.*fn5

Irreparable injury is not in itself a sufficient predicate for the entry of a preliminary injunction.*fn6 There must also be substantial reason to believe that the conduct of which the plaintiff complains is unlawful and is the cause of his threatened loss.*fn7 How clear the showing of illegality must be will vary from case to case; no doubt, the greater the urgency and the greater the extent of the impending injury, the more appropriate it may be to retain the status quo temporarily while the court appraises the strength of the legal claim. Thus, the requirement of a "reasonable likelihood of success" is necessarily a somewhat flexible standard that allows the chancellor room for the exercise of judgment. At the very least, however, plaintiff must demonstrate that his claims are " so serious, substantial, difficult and doubtful, as to make them a fair ground for litigation and thus for more deliberate investigation. '"*fn8

In this case it is perfectly clear that, even if plaintiff is able to prove a violation of the Robinson-Patman Act, there is no causal connection between that violation and his termination. We are also convinced that there is no basis in the record for concluding that ARCO is violating § 2 of the Sherman Act. We therefore reverse.


ARCO sells gasoline directly to retail service stations in the Lawrence County area. These stations compete with the 20 stations that are supplied by plaintiff. Plaintiff has asserted that ARCO discriminates in favor of its own retail outlets and against plaintiff in two different ways.

First, in his complaint plaintiff apparently took the position that the termination itself was discriminatory since ARCO planned to continue supplying its own outlets while refusing to sell to him. It has long been settled, however, that such discrimination does not violate the Robinson-Patman Act.*fn9 For that statute does not require a seller to create or to maintain a customer relationship with any buyer or prospective buyer.*fn10

Second, on appeal plaintiff's Robinson-Patman claim is solely that a two cent per gallon rebate made available to retailers participating in defendant's so-called "Mini Service" program illegally discriminated against him.*fn11 Assuming that to be true, such illegality could be removed without modifying the "Mini Service" program simply by discontinuing sales to customers, such as plaintiff, who did not participate in that program. Since one method of terminating that illegality would be to terminate plaintiff's distributorship, it is manifest that an assumption that the "Mini Service" program was illegal does not justify an injunction imposing a continuing business relationship upon these parties.*fn12 More fundamentally, there is neither a finding nor evidence ...

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