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THOMAS v. AMERADA HESS CORP.

January 17, 1975

ROBERT J. THOMAS and JEAN M. THOMAS, his wife, tr/as THE 89-er; and JOSEPH HROBUCHAK and OLGA HROBUCHAK, his wife, tr/as SAVE-WAY
v.
AMERADA HESS CORPORATION, ASHLAND OIL, INC., BRITISH PETROLEUM OIL, INC., CITIES SERVICE CO., CONTINENTAL OIL CO., MURPHY OIL CORPORATION, PHILLIPS PETROLEUM CORP., SOUTHERN FACILITIES, INC., CHEVRON, TENNECO OIL COMPANY, GETTY OIL CO .



The opinion of the court was delivered by: BECHTLE

This matter is before the Court on the motions of defendants remaining in the action for summary judgment in a private civil action for damages based upon alleged violations of several statutes. These are §§ 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2); § 2 of the Clayton Act, as amended by § 1 of the Robinson-Patman Act (15 U.S.C. § 13); § 3 of the Clayton Act (15 U.S.C. § 14); and, § 210(a) of the Economic Stabilization Act of 1970, 83 Stat. 377 (12 U.S.C. § 1904 note). For reasons hereinafter stated, the motions will be allowed.

 The original complaint, filed May 25, 1973, charged seventeen oil companies, a parent corporation of an oil company, two pipelines, an owner of a petroleum terminal facility, and a distributor of petroleum products *fn1" with combining and conspiring in restraint of trade by monopolizing and attempting to monopolize the Scranton/Wilkes-Barre, Pennsylvania, gasoline market area (Lackawanna and Luzerne Counties) and conspiring to destroy the independent retail segment of that two-county market area by depriving plaintiffs of gasoline.

 Extensive pretrial discovery running into the thousands of pages has been conducted by plaintiffs and defendants, including the deposition of fifteen witnesses, eleven of whom were examined by plaintiffs. Neither side can validly claim a lack of opportunity to show the existence or nonexistence of material fact in support of their claim.

 The plaintiffs are four in number. Two of them, Joseph Hrobuchak and his wife, trading as Save-Way (sometimes hereinafter referred to as "Hrobuchak") are independent marketers of gasoline in the two-county area. The other two, Robert J. Thomas and his wife, trading as The 89-er (sometimes hereinafter referred to as "Thomas") are former independent retail marketers of gasoline in that area. Within that area, there were at least sixteen independent unaffiliated service stations in April of 1973.

 Generally, an independent marketer of gasoline is one who operates a retail gasoline service station under his own trade name, buying unbranded regular-grade gasoline on a load-to-load basis and selling it under the trade name of the station without reference to the trade name or trademark of the supplier. He is a freelancer, staying clear of binding written agreements with his supplier, and thus avoiding exclusive supply requirement conditions and resale restrictions. In this way, he is free to select the supplier that gives him the most advantageous deal possible in the area of price, credit terms, and promptness of delivery. Occasionally, he will deal with more than one supplier to insure a ready volume of gasoline for his station even though the other gives the better bargain. He controls the conditions and appearance of his station and his hours of operation. He resells for cash at prices somewhat lower than that prevailing for regular-grade gasoline sold under a brand name by his nearby competitors.

 In times when scarcity of gasoline exists, unless there is Government intervention, the independents (having no contractually enforceable supply rights against the supplier) are usually the first to suffer by having their gasoline deliveries cut off or drastically reduced because of the suppliers' contractual demands that must be honored first.

 No gasoline refinery is located in the two-county market area. The nearest ones are in Rahway, New Jersey, and Philadelphia, Pennsylvania, approximately 90 and 100 miles away, respectively. Some of the oil companies, such as Arco, Gulf and Sunoco of Pa., bring their own refined products into the area by tank trucks for the benefit of their branded dealers. Others, such as Chevron, which has a refinery in Perth Amboy, New Jersey, and Exxon which has the one in Rahway, transport their products over the Buckeye Pipeline (" Buckeye") *fn2" which starts in Linden, New Jersey, and has multiple terminals in Dupont, Lackawanna County, Pennsylvania. At the pipeline terminals, the products are placed in the local holding tanks of the transporter or the storage facilities of a distributor, such as Southern or Agway Petroleum Corp. ("Agway"). From the holding tanks, the products are loaded into highway tank trucks for delivery to smaller distributors' storage tanks or directly to the retailer.

 Some of the oil companies that have no nearby refinery but desire to sell gasoline in the vicinage have entered into exchange agreements with one or more of the other companies that do have such a facility or ready access to its output. In essence, these agreements provide that company "A", which has a refinery or large storage facilities nearby, is to make available in the area a certain amount of gasoline to company "B" in exchange for the same quantity in another area where company "B" has a refinery, large storage facilities, or access to a ready supply and company "A" does not. These agreements are made on condition that the exchanged product meets the specifications of each party. Allowances are made in the agreements for differences in transportation costs and incidental charges. It is apparent that company "B" could not compete profitably in the area without such an agreement. Sometimes a "B" oil company will assign a portion of the supply to which it is entitled under an exchange agreement to another company in exchange for an equal supply in another part of the country.

 A number of oil companies, such as Arco, Exxon, Getty, Gulf, Sunoco of Pa. and Texaco, sell their products to branded stations only. Several of these companies took affirmative action during the years 1969 to 1973 to insure that their products did not reach the unbranded marketers.

 It is difficult to pinpoint plaintiffs' Sherman and Clayton Acts antitrust claims against the defendants from the allegations of the complaint and the amendments to it. However, from the depositions of plaintiffs and their answers to interrogatories, it is apparent that their basic complaint is that immediately after April, 1973, Thomas was unable to obtain any gasoline for his business from the defendants while Hrobuchak was able to obtain a supply from Ashland but on "a ruinous allocation basis."

 PRESENT DEFENDANTS

 During the pendency of this action, half or eleven of the original twenty-two defendants have been dropped from this case by stipulation of the parties. The remaining defendants are Chevron, Ashland, BP, Southern, Conoco, Murphy, Tenneco, Getty, Phillips, Hess and Cities. With the exception of Southern and Cities, they are integrated oil companies; that is, they are engaged in the exploration, importation, production, refining, transportation, and marketing of petroleum and its products, either by themselves or through subsidiaries.

 Chevron is a California corporation with offices in Perth Amboy, New Jersey, and is a wholly owned subsidiary of Standard Oil Company of California. Since January of 1970, Chevron sold gasoline in the two-county area through some six or seven distributors only. There are twelve to fifteen service stations in the area selling Chevron branded gasoline (both premium and regular grades). Chevron does not operate any of them. They are supplied by distributors of Chevron. All of the gasoline that Chevron distributes in the area either by sale or through exchange agreements comes from its Perth Amboy refinery through Buckeye to its Dupont terminal in Avoca, Pennsylvania. It is by far the largest supplier of unbranded gasoline in the area and has exchange agreements with Agway, BP, Hess and Tenneco. ...


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