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GOLDINGER v. BORON OIL CO.

May 6, 1974

Richard J. GOLDINGER, Plaintiff,
v.
BORON OIL COMPANY, Defendant


Weber, District Judge.


The opinion of the court was delivered by: WEBER

Plaintiff, whose contract with defendant to operate a retail gasoline service station was terminated effective January 24, 1972, has filed this complaint on causes of action which are all based on plaintiff's agreement with defendant to operate the retail gasoline station. Count I of the complaint alleges that such agreement was in violation of the antitrust laws of the United States, constituting a conspiracy to fix prices in violation of Sec. 1 of the Sherman Act, [ 15 U.S.C.A. § 1], or a tying arrangement in violation of Sec. 1 of the Sherman Act, or Sec. 3 of the Clayton Act [ 15 U.S.C.A. § 14]. Jurisdiction of Count I is claimed under the antitrust laws of the United States.

 In Counts II and III of the complaint, plaintiff asserts diversity jurisdiction and pleads causes of action arising out of the same contract. In Count II plaintiff claims that his discharge was unjustified because the contract between him and the defendant was unconscionable and void. Count III of the Complaint complains that his discharge was void because it was arbitrary and unreasonable. Plaintiff claims treble damages under Sec. 4 of the Clayton Act, 15 U.S.C.A. § 15, for the cause of action asserted under Count I, and compensatory damages for the causes of action asserted in Counts II and III of the Complaint.

 Both the plaintiff and defendant have moved for summary judgment on all counts of plaintiff's complaint.

 The evidentiary materials presented by the parties consist of a Commission Manager Agreement of May 26, 1966 and a subsequent similar agreement of May 1, 1969, which was in effect at the time of termination. The relationship between the parties was conducted under these agreements. Also proffered were equipment schedules, operating reports, plaintiff's income tax reports, correspondence, deposition testimony of plaintiff and of defendant's division manager, and a consent decree entered into a United States District Court in Ohio with related exhibits. While objection has been made to the admissibility of certain evidence proffered, which objections were considered herein with respect to the matters upon which the court made its findings, we are primarily concerned with the search for a genuine issue of material fact.

 It would appear from this status of the record that as to all causes of action pleaded the parties are in agreement that there is no genuine issue of any material fact and that the issues can be determined as a question of law. While the parties in their briefs and arguments assert many conflicting inferences and conclusions to be drawn from the undisputed facts it does not appear to the court after a review of the evidentiary material that there is a genuine issue of material fact between plaintiff and defendant.

 THE ANTITRUST CAUSE OF ACTION

 A. The tying arrangement allegation. [Clayton Act, Sec. 3, Sherman Act, Sec. 1].

 We find it appropriate first to consider plaintiff's allegation that the contract between him and the defendant constituted a tying agreement in violation of Sec. 3 of the Clayton Act. We do this because the price fixing allegation of Count I involves consideration of the same elements as are necessary for the determination of Counts II and III, plaintiff's status as an employee or an independent dealer. A tying arrangement has been defined as follows:

 
"For our purposes a tying arrangement may be defined as an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier." Northern Pacific Co. v. United States, 356 U.S. 1, 5-6, 78 S. Ct. 514, 518, 2 L. Ed. 2d 545 [1958].

 We do not reach the question of lessening of commerce or restraint of trade unless and until the facts establish that a tying arrangement exists. Hunter Douglas Corp. v. Lando Products, Inc., 215 F.2d 372, 376 [9th Cir. 1954]; Allied Equipment Co. v. Weber Engineered Products, Inc., 237 F.2d 879, 883 [4th Cir. 1956]; Stokes Equipment Co. v. Otis Elevator Co., 340 F. Supp. 937, 940-941 [E.D. Pa. 1972].

 Paragraph 8 of plaintiff's complaint recites that "plaintiff was required by defendant not to deal in TBA products, (tires, batteries and accessories) greases, oils, lubricants and other goods, wares and merchandise other than those of defendant's choosing." Although it is not specifically averred in the complaint we assume from plaintiff's allegation of a contract with defendant with respect to a retail gasoline station that the tying product was gasoline and that the tied products were the other ones mentioned in paragraph 8.

 It is essential in all tying cases under Sec. 3 of the Clayton Act that there must be a seller and a buyer or a lessor and a lessee and a tying and tied product, service or commodity. ("We need not discuss the respondent's further contention that the contract also violated § 1 and § 2 of the Sherman Act, for if it does not fall within the broader proscription of § 3 of the Clayton Act it follows that it is not forbidden by those of the former." Tampa Electric Co. v. Nashville Coal, 365 U.S. 320, 335, 81 S. Ct. 623, 632, 5 L. Ed. 2d 580 [1961]). Section 3 of the Clayton Act provides:

 
" It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities . . . on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce." (15 U.S.C.A. § 14).
 
"Furthermore, there should be a clear statement of whether or not there were any tie-in sales. The oblique and incidental assumption regarding such 'alleged ' sales in Finding 22, is not an acceptable substitute for a definite and forthright Finding of Fact." Hunter Douglas Corp. v. Lando Products, 215 F.2d 372, 376 [9th Cir. 1954],

 and:

 
"There can be no violation of the (Sec. 3 Clayton) Act unless there is a contract, sale or lease." Allied Equipment Co. v. Weber Engineered Prod. Co., 237 F.2d 879, 883 [4th Cir. 1956].

  With these strictures in mind we must examine the nature of the business arrangement between the plaintiff and defendant. There is no allegation in the complaint that plaintiff purchased or was required to purchase or lease any product or property from the defendant. There is nothing in the evidentiary material including plaintiff's own deposition to show that he ever purchased or was required to purchase any product from the defendant except that plaintiff did purchase soap and towels for his gasoline station restrooms (not for resale), which he was under no obligation to purchase from defendant. The contract and the evidence show that the gasoline and other accessory products which were sold at retail in the gasoline station in question were supplied by the defendant to the station and title to this property remained in the defendant until it was sold to the retail consumer. The price at which the gasoline and other products were sold was determined by the defendant and the plaintiff received a flat rate commission per gallon on the sales of gasoline regardless of the price at which it might be sold but received a percentage of sales price commission on other products. Furthermore, the contract and the evidence show that there was no lease for the premises were plaintiff performed his services. The plaintiff was entrusted with custody of the retail gasoline station and the equipment of the defendant installed thereon without any requirement of rental or without a condition of occupancy for a fixed term.

 A close examination of plaintiff's complaint reveals that there is no allegation that the plaintiff bought anything from the defendant or that he was required to buy anything from the defendant. Paragraph 8 of the complaint alleges that plaintiff was required by defendant not to deal in products other than those of defendant's choosing and paragraph 9 of the complaint alleges that plaintiff was required to give trading stamps to retail customers and to participate in promotional and advertising programs. Neither paragraph expresses any allegation of a sale or lease of property between plaintiff and defendant. The plaintiff's own testimony on deposition recites that except for supplies of towels and soap, which the plaintiff purchased from defendant for use in the station and which he also purchased from suppliers other than defendant, plaintiff purchased no other goods, wares, merchandise, machinery, supplies, or other commodities from defendant in the years from 1966 to 1972.

 Plaintiff relies on Simpson v. Union Oil Co. of Cal., 377 U.S. 13, 84 S. Ct. 1051, 12 L. Ed. 2d 98 [1964]. In that case the court considered the effects of an arrangement between a plaintiff dealer and the defendant oil company wherein goods were placed with the dealer on consignment and title never changed until the sale to the retail customer. The Court disregarded the contractual designation and looked at the substance of the transaction to determine its antitrust effect.

 
"The interests of the Government also frequently override agreements that private parties make. Here we have an antitrust policy expressed in Acts of Congress. Accordingly, a consignment, no matter how lawful it might be as a matter of private contract law, must give way before the federal antitrust policy." (p. 18).

 However, we find on examination of Simpson that the court was dealing with a situation considerably different in its factual background from the present case. Simpson was recognized by the Court as an independent dealer. He leased the gasoline station from the defendant company for a fixed term. Under the agreement the defendant company consigned gasoline to Simpson, retaining title until the gasoline was sold to the retail customer. The defendant company set the selling price for the gasoline. The plaintiff's profit from commissions on sales was nevertheless geared to the rise or fall of the retail prices. The violation of the antitrust laws alleged by the plaintiff was a price fixing agreement. The Court commented upon the consignment arrangement as follows:

 
"Dealers, like Simpson, are independent businessmen; and they have all or most of the indicia of entrepreneurs, except for price fixing. The risk of loss of the gasoline is on them, apart from Acts of God. Their return is affected by the rise and fall in the market price, their commissions declining as retail prices drop. Practically the only power they have to be wholly independent businessmen, whose service depends upon their own initiative and enterprise, is taken from them by the proviso that they must sell their gasoline at prices fixed by Union Oil." (pp. 20, 21).

 Simpson does not deal with tying agreements. While it will be necessary to examine Simpson further with respect to the present plaintiff's further allegation that the agreement between him and defendant constituted an illegal price-fixing arrangement, we cannot see how Simpson aids in our determination of whether the present agreement between plaintiff and defendant constitutes a tying arrangement. The plaintiff in Simpson had all of the aspects of an independent dealer and the court's recognition of ...


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