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SWETTLEN v. WAGONER GAS & OIL INC.

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA


April 1, 1974

Robert J. Swettlen and Patricia A. Swettlen
v.
Wagoner Gas and Oil, Inc., Phillips Petroleum Co. and George H. Wagoner

Snyder, D.J.

The opinion of the court was delivered by: SNYDER

Opinion and Order

SNYDER, D.J.:

 The parties to this proceeding, on the basis of a Stipulation of Facts, have asked this Court to rule on the legality of the pricing system used by Wagoner Gas and Oil, Inc. and allegedly concurred in by Phillips Petroleum Company. This pricing system forms the basis of the civil anti-trust suit before the Court.

 The Plaintiffs (Swettlen) were operators of a gasoline station in the Borough of Youngwood, Westmoreland County, Pennsylvania, between September 1, 1969 and April 30, 1972. They brought suit against Wagoner Gas and Oil, Inc. (Wagoner), the tenant of the service station premises and a jobber or distributor to Swettlen of the petroleum products sold to the public; and against Phillips Petroleum Company (Phillips), supplier of the products to the jobber; and against George H. Wagoner, owner and lessor of the service station real estate and operator of the distribution business prior to 1965, when Wagoner Gas and Oil, Inc. was incorporated. The Plaintiffs contend, and the Defendants deny, that the pricing system used by Wagoner violated Section 1 of the Sherman Act. The parties entered into written stipulations describing the system of pricing.

 Prior to 1962, George Wagoner was a jobber for various oil companies. In 1962, he entered into a jobber contract with Phillips for a territory which included Westmoreland County, parts of Allegheny and Washington Counties, all in Pennsylvania, and a part of Garret County, Maryland. Within this territory, George Wagoner owned or leased service stations for the retail sale and distribution of petroleum products. He leased or sub-let the stations to independent retail dealers and supplied them with petroleum products. In 1965, George Wagoner incorporated his business and formed Wagoner Gas and Oil, Inc. He was an officer, director, and shareholder of the corporation, and in 1965, Wagoner entered into the subject jobber contract with Phillips, which was the same contract which George Wagoner individually had signed in 1962.

 Wagoner used a unique pricing system in charging the Plaintiffs and its other dealers. It determined what the "normal retail price should have been for the various grades of gasoline and diesel fuel it delivered. A pricing schedule was then devised in which the "normal" price appeared as the highest figure on the schedule. The schedule then listed possible retail prices below the "normal" price, and for each price, the schedule listed a corresponding cost to the dealer. When a dealer's retail price was below the "normal" retail price, then the dealer's price per gallon would vary according to the amount his retail price was below "normal". The system is demonstrated from the following examples: WAGONER'S EFFECTIVE PRICES TO DEALERS (REGULAR GASOLINE) (cent per gal.) Effective Price to Price Period Dealer Retail Dealer I Prior to 35.9 cents 32.12 cents 9/1/69 -- 31.9 29.12 3/30/70 28.9 26.90 II 36.9 cents 33.01 cents 3/31/70 31.9 29.26 29.9 27.90 III 37.9 cents 34.01 cents 4/1/70 -- 31.9 29.51 11/16/70 30.9 28.09 IV 38.9 cents 34.9 cents after 31.9 29.65 4/30/72 30.9 28.9 WAGONER'S EFFECTIVE PRICES TO DEALERS (PREMIUM GASOLINE) (cent per gal.) Effective Price to Price Period Dealer Retail Dealer I Prior to 40.9 cents 36.87 cents 9/1/69 -- 36.9 33.87 3/30/70 34.9 32.15 II 40.9 cents 37.01 cents 3/31/70 36.9 34.01 III 41.9 cents 38.01 cents 4/1/70 -- 36.9 34.26 11/16/70 35.9 33.15 IV 42.9 cents 38.9 cents 11/17/70 -- after 39.9 36.65 4/30/72 37.9 35.15 Wagoner's effective prices to dealers (DIESEL FUEL) (cents per gal.) Effective Price to Price Period Dealer Retail Dealer Incl. W/ I, II Tax Tax Prior to 35.9 cents 23.9 cents 21.15 cents 9/1/69 -- 3/31/70 31.9 19.9 18.4 III, IV 4/1/70 -- 36.9 cents 23.9 cents 21.15 cents after 4/30/72 32.9 19.9 18.4

19740401

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