The opinion of the court was delivered by: Richard Mills, District Judge:
The arcane mysteries of antitrust standing.
And — like all legal concepts — there is a chameleon
quality to this principle.
Antitrust law might be summarized as a great, albeit
maddeningly imprecise, panacea of the anticompetitive ailments
of free enterprise.
"Antitrust laws in general, and the Sherman Act in
particular, are the Magna Carta of free enterprise. They are as
important to the preservation of economic freedom and our
free-enterprise system as the Bill of Rights is to the
protection of our fundamental personal freedoms." United States
v. Topco Associates, Inc., 405 U.S. 596, 610, 92 S.Ct. 1126,
1135, 31 L.Ed.2d 515 (1972).
"One problem presented by the language of § 1 of the Sherman
Act is that it cannot mean what it says. The statute says that
'every' contract that restrains trade is unlawful. But, as Mr.
Justice Brandeis perceptively noted, restraint is the very
essence of every contract; read literally, § 1 would outlaw the
entire body of private contract law. . . ." National Soc. of
Professional Engineers v. United States, 435 U.S. 679, 687-688,
98 S.Ct. 1355, 1363, 55 L.Ed.2d 637 (1978) (footnotes omitted).
While the Supreme Court has stated that "it is virtually
impossible to announce a black-letter rule that will dictate
the result in every case," the Supreme Court has identified the
relevant factors to be considered. Associated General
Contractors of California, Inc. v. California State Council of
Carpenters, 459 U.S. 519, 536, 103 S.Ct. 897, 908-911, 74
L.Ed.2d 723 (1983).
This matter is before the Court on a joint summary judgment
motion on behalf of all Defendants based on Plaintiffs' alleged
lack of antitrust injury and standing.
The bottom line: Allowed. Case dismissed.
More than 70 lawyers have now appeared in this case. Over 750
pleadings have been filed producing a case file which, if
placed in a single stack, would exceed twelve feet in height.
Since this case presents a classic example of the saying "you
can't tell the players without a program," we start with a
review of that "program."
Plaintiffs and Plaintiff-Intervenors (hereafter referred to
collectively as "Plaintiffs") fall into three basic groups:
ethanol producers, gasohol blenders, and the State of Illinois.
Plaintiffs Greater Rockford Energy and Technology
Corporation, Shepherd Oil, Inc., Vidalia Ethanol, Ltd., Alpebo,
Inc., Shreveport Ethanol, Inc., Lakefield Ethanol, Inc., A.E.
Montana, Inc., CEPO, Inc. and Texas Ethanol Producers, are
ethanol producers and/or sellers. Plaintiff-Intervenor Wurster
Oil Company, Inc. is a gasohol blender and has sold to
distributors, but it is apparently
suing only in its capacity as a seller of ethanol.
Plaintiff-Intervenors Cajun Energy, Inc. and Public
Terminals, Inc. are gasohol blenders who sell to distributors
Plaintiff State of Illinois has intervened as a Plaintiff "on
behalf of all Illinois citizens, the State of Illinois and its
The Defendants are major oil companies and all are members of
the American Society for Testing and Materials (ASTM) and the
American Petroleum Institute (API). Defendants are Shell Oil
Company, Marathon Petroleum Co., Amoco Oil Company, Chevron
U.S.A., Inc., Atlantic Richfield Co., B.P. America, Exxon
Company U.S.A. and Mobil Corporation.
In addition to the parties described above, three parties
made unsuccessful attempts to intervene as Plaintiffs and
several Defendants settled out. Furthermore, diversity between
the Plaintiffs and the Defendants is not complete.
The complaints of all Plaintiffs contain essentially the same
Count I alleges a contract, combination or
conspiracy in violation of section 1 of the
Sherman Antitrust Act.
Count II alleges violations of section 26a of the
Clayton Antitrust Act (the Gasohol Competition Act
Count III alleges monopolization activities in
violation of section 2 of the Sherman Antitrust
Count IV alleges violations of the Illinois Fraud
and Deceptive Practices Act and monopolization
activities in violation of the Illinois Antitrust
Count V alleges commercial disparagement in
violation of the Illinois Fraud and Deceptive
Plaintiffs seek treble damages in the amount of 2.85 billion
dollars as well as various injunctive relief.
The original complaint was filed on June 1, 1988 in the
Danville Division of the Central District of Illinois by
Plaintiffs Greater Rockford Energy and Technology Corporation,
Shepherd Oil, Inc., Vidalia Ethanol, Ltd., Alpebo, Inc.,
Shreveport Ethanol, Inc., Lakefield Ethanol, Inc. and A.E.
Montana, Inc. All of these original Plaintiffs are — or were
— ethanol producers. Other Plaintiffs were allowed to
intervene later, including the State of Illinois which filed
its complaint on March 2, 1990. This case was reassigned to
this judge and division on May 21 of the same year.
The State of Illinois claims to have been injured as follows:
a. Illinois motorists and motorists nationwide
have been forced to pay higher prices at the pump
for motor fuel than they would have had to pay, if
defendants had not suppressed competition between
gasohol and gasoline in the motor fuel
b. Illinois citizens engaged in the production,
distribution and sale of ethanol and gasohol have
lost jobs and profits as a result of defendants'
c. Illinois farmers and others connected with the
agricultural economy of Illinois have lost jobs
and profits as a result of the decreased
production and sale of corn, [more] than would
have occurred had defendants not substantially
prevented the widespread entry of ethanol and
gasohol into the mainstream of the motor fuel
d. The quality of the environment and the public
health have been adversely affected by defendants'
exclusionary activities. Gasoline blended with 10%
ethanol significantly reduces harmful emissions of
carbon monoxide from motor vehicles into the
atmosphere. In addition, ethanol is a more
efficient and safer octane enhancer than those
used by defendants. Due to the suppression of
ethanol from the motor fuel market, Illinois
citizens and citizens across the nation have been
deprived of the health benefits of gasohol.
f. The general economy of the State of Illinois
has been injured and damaged because of the loss
of economic development that the State would have
enjoyed if the ethanol industry had not been
severely crippled by defendants' conduct. Illinois
is now and has been capable of producing hundreds
of millions of gallons of fuel ethanol annually.
New investment in plant and equipment in Illinois
required to produce the ethanol necessary to meet
the increased demand in a free and competitive
motor fuel market would approximate one (1)
billion dollars. The ripple effect of this new
capacity upon the Illinois economy would be
enormous. These effects include jobs created in
the construction, plant operations,
transportation, seed and feed industrial
stimulation, fertilizer manufacturing, and other
The only monetary relief sought by the State of Illinois were
Illinois statutory penalties. But those prayers for statutory
civil penalties were dismissed by an earlier court order,
leaving the State of Illinois in this suit only to pursue
Prior Motions Based on Standing
At a hearing on April 14, 1989, Judge Baker denied
Defendants' motion to dismiss for lack of standing to sue. In
a short order entered on April 17, 1989, the Court concluded
that "the allegations of the pleadings, fairly read, show that
the plaintiffs are competitors of the defendants in the market
for non-diesel automotive fuels, and that the plaintiffs have
alleged direct antitrust injury."
On May 21, 1990, Judge Baker recused himself and the case was
reassigned this case to the Springfield Division. On November
9, 1990, this Court denied a subsequent motion to dismiss
stating that "on the limited record before us we cannot
determine whether Plaintiffs are in fact actual competitors of
the Defendants or merely more remote suppliers of direct
competitors. At the conclusion of discovery, and upon a more
complete record, we can revisit this issue."
Discovery has now closed and the record is no longer limited
— in fact, it is so voluminous that it would fill a
five-drawer filing cabinet. Defendants have now moved for
summary judgment based on Plaintiffs' lack of antitrust
standing and injury. Because standing determinations are
factually intense, we review the record, particularly
Plaintiffs' Final Statement of Contentions and Proof in
excruciatingly painful detail.
Plaintiffs were ordered to file both a preliminary and a
final statement of contentions and proof. The contents of their
Final Statement of Contentions and Proof (hereafter "Final
Statement") are generally not organized or identified on a
count-by-count basis. They quote at length from the Senate and
House reports on the Gasohol Competition Act of 1980 and argue
that the Act, as well as actions by other government agencies,
show government acceptance of 10% ethanol blended fuels as
quality fuels. The contentions which follow are drawn from
Plaintiffs' Final Statement.
Plaintiffs broadly complain that Defendants "flouted
Congress' intent and will expressed in the Gasohol Competition
Act of 1980, and undertook a concerted and ruthless program of
lawlessness, unfair competition, and anti-competitive conduct."
They state that each of the Defendants market their motor
fuel through branded, vertically integrated distribution
systems in competition with ethanol producers and blenders.
They then contend that they "compete with defendants at every
level of the integrated petroleum industry from refining down
the stream." By way of example, Plaintiffs state that "in
distilling ethanol with gasoline to make gasohol, plaintiffs
engage or engaged in activities equivalent to defendants'
operations that made crude oil into gasoline. In seeking
customers for ethanol, or gasohol for distribution
or resale, plaintiffs compete with defendants' distribution and
Plaintiffs also contend, rather incredibly, that "[s]ince
defendants manufacture and market motor fuels throughout the
country, plaintiffs compete with defendants in 48 contiguous
They opine that Defendants subjected their dealers to
"economic serfdom" through interrelated agreements including a
lease, a product supply contract and the trademark license.
Plaintiffs state that branded franchising affords the
Defendants "a great degree of certainty about how much crude
oil and refined product" they will move. They also asseverate
that branded franchising "effectively precludes the system of
'open supply.'" Plaintiffs then assert that "[t]he Gasohol
Competition Act of 1980 to a substantial degree could have
created an open supply system."
They argue that "Defendants had an understanding to
discriminate against and to disparage ethanol and gasohol so as
to eliminate competition from ethanol and gasohol in the motor
fuels market in violation of the antitrust laws." Apparently,
the Court is to consider this alleged "understanding" as being
a "contract, combination or conspiracy in violation of section
1 of the Sherman Antitrust Act" as alleged in Count I of
Plaintiffs avow four bases for their assertion of Defendants'
understanding and/or their assertion that Defendants violated
the Gasohol Competition Act of 1980. It is claimed that:
(A) each Defendant engaged in conduct that
unreasonably discriminated against or limited the
sale, resale, or transfer of gasohol, in violation
of 15 U.S.C. § 26a;
(B) Defendants unlawfully limited the use of
credit card instruments in transactions involving
the sale, resale or transfer of gasohol;
(C) Defendants further unreasonably discriminated
against or unreasonably limited the sale, resale,
or transfer of gasohol through other anti-alcohol
activities which decreased public acceptance of
gasohol and deterred dealers and jobbers from
(D) Defendants communicated among themselves and
other co-conspirators sensitive competitive
information about the marketing of motor fuels
including ethanol and gasohol.
We examine each of Plaintiffs' four asserted bases in turn.
A. Unreasonable Restrictions on Gasohol
In support of their contention that "each Defendant engaged
in conduct that unreasonably discriminated against or limited
the sale, resale, or transfer of gasohol, in violation of
15 U.S.C. § 26a," Plaintiffs declare that:
(1) Defendants refused to permit use of existing tanks and
pumps, regardless of ownership, for storage and dispensing of
In support of this assertion, Plaintiffs' provide
approximately four pages of quotes from House and Senate
Reports dealing with past actions by major oil companies that
the Gasohol Competition Act of 1980 was intended to address.
Plaintiffs further aver that "defendants through contractual
agreements and the terms thereof ["contracts" for short], as
well as other communications to jobbers and dealers, have
uniformly prohibited the use of existing tanks and pumps for
gasohol." In an accompanying footnote, the various methods of
prohibiting dealers from using existing tanks for gasohol are
listed, including the use of supply agreements requiring the
dealer to purchase minimum quantities from the oil company
(Exxon), requiring dealers to sell all three grades of the oil
company's gasoline leaving, in most cases, no underground
storage tanks available for gasohol (Shell), and prohibiting
dealers from "splash blending" ethanol with branded gasoline
and selling it as a branded product (Chevron).
(3) Defendants exhibited a strong antigasohol attitude,
coupled with strongly worded suggestions that the dealers and
jobbers must check with company representatives before they
began marketing gasohol.
(4) Through their debranding policies, Defendants imposed
unreasonable labeling requirements on their dealers and jobbers
which substantially impaired and unreasonably limited them in
(5) Defendants either threatened to terminate the franchises
of dealers who sold gasohol or issued subtle threats which had
the effect of discouraging their sale of gasohol.
The only evidence presented in support of this allegation
were quotes from a Senate Report dealing with conduct of oil
companies before the passage of the Act.
B. Credit Card Instruments
To support their contention that "Defendants unlawfully
limited the use of credit card instruments in transactions
involving the sale, resale or transfer of gasohol," Plaintiffs
maintain that Gulf Oil Company, which was purchased by BP
America and Chevron U.S.A., and Amoco refused to allow their
credit cards to be used for the purchase of gasohol (except
insofar as Amoco allowed its card to be used to purchase Amoco
branded gasohol, where it marketed gasohol), while Shell
imposed a 3 1/2% charge on gasohol purchases, and Atlantic
Richfield "and others" required that special procedures be
followed and that notations be made on credit card receipts for
the sale of gasohol, all allegedly in violation of the Gasohol
Competition Act of 1980.
C. Other Antigasohol Activities
In support of the contention that "Defendants further
unreasonably discriminated against or unreasonably limited the
sale, resale, or transfer of gasohol through other anti-alcohol
activities which decreased public acceptance of gasohol and
deterred dealers and jobbers from selling gasohol," Plaintiffs
(1) Defendants engaged in an anti-alcohol campaign which had
the effect of discouraging the motoring public from buying
gasohol and discouraging dealers and jobbers from selling
Plaintiffs claim that gasohol, which they parenthetically
define as "ethanol enriched fuels" (although the term actually
refers to gasoline blended with either ethanol or methanol),
was a well accepted, high quality motor fuel. Between 1980 and
1986, ethanol sales increased steadily from 50 million gallons
per year to eight hundred million gallons per year. Defendants
realized that ethanol was useful from the standpoint of adding
octane to fuel, especially in light of the need to phase-out
lead which also boosted octane. Chevron purchased a majority
interest in a Kentucky ethanol production facility and blended
its own gasohol which it sold in Kentucky and portions of
Tennessee. During that time, Chevron touted "the product" as
being a high quality motor fuel. Amoco purchased ethanol
directly from refiners, blended it with Amoco gasolines, and
sold it as a branded product in certain parts of the Midwest,
including Iowa, Nebraska, North Dakota and South Dakota. In the
areas that Amoco marketed gasohol, Amoco touted its high
It is argued by Plaintiffs that "[t]he Gasohol Competition
Act allowed branded dealers to handle the product at branded
locations by simply debranding the pump and continuing to use
existing tanks and pumps."
Defendants, beginning with Shell, Amoco, Marathon and Chevron
allegedly began to "disparage ethanol" by disseminating
misleading information. "The most obvious and conspicuous
campaign was the practice by which the defendants' adorned
their branded stations with point of sale sign materials which
shouted that the product sold . . . contained no alcohol,
ethanol or methanol." [Plaintiffs' accompanying 5-page endnote
makes reference to numerous signs stating "No Alcohol" and does
not mention a single sign specifically referring
to ethanol or methanol.] ...