of section 2 of the Sherman Act; (2) an attempt to impose both (a) an exclusive dealing arrangement and (b) a tie-in, in violation of section 1 of the Sherman Act and section 3 of the Clayton Act; (3) an illegal termination under the Petroleum Marketing Practices Act, supra; (4) a violation of certain regulations promulgated by the Department of Energy ("D.O.E.") pursuant to the Emergency Petroleum Allocation Act of 1973, 10 C.F.R. §§ 210.61, 210.62(a) (1980); and (5) a breach of contract. Plaintiffs' second complaint seeks damages but no injunctive relief, and this second action has been consolidated with plaintiffs' first complaint of August 12, 1980. Pursuant to Rule 56, F.R.Civ.P., defendant Gulf now moves for summary judgment on all of plaintiffs' outstanding claims.
In assessing defendant's Rule 56 motion, I am mindful that trial courts must resolve "all inferences, doubts and issues of credibility against the moving party." Smith v. Pittsburgh Gage and Supply Company, 464 F.2d 870, 874 (3d Cir.1972). I also recognize that trial courts must be particularly chary of granting summary judgment on antitrust claims where motive and intent often "play leading roles," Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S. Ct. 486, 491, 7 L. Ed. 2d 458 (1962), but this necessary chariness does not mean that a court should overlook Rule 56(e)'s requirement that a party opposing summary judgment "set forth specific facts showing that there is a genuine issue for trial." F.R.Civ.P. 56(e); see First National Bank of Arizona v. Cities Service, 391 U.S. 253, 288-90, 88 S. Ct. 1575, 1592-93, 20 L. Ed. 2d 569 (1968).
I will consider whether summary judgment on plaintiffs' outstanding claims for damages is warranted treating those claims in the following order: (a) the exclusive dealing and tie-in claims under the Sherman and Clayton Acts, (b) the illegal termination claim under the Petroleum Marketing Practices Act ("PMPA"), (c) the breach of contract claim with respect to Gulf's termination of plaintiffs' franchises, and (d) the breach of contract claim in connection with Gulf's allegedly new policy regarding the use of Gulf credit cards. Plaintiffs have conceded that summary judgment is appropriate with respect to the remainder of their claims.
The Exclusive Dealing and Tie-in Claims
Before addressing the merits of plaintiffs' antitrust claims, I must consider Gulf's affirmative defenses. Gulf contends that the undisputed facts demonstrate that this court lacks jurisdiction over these claims. I turn first to the jurisdictional issue under the Sherman Act.
Section 1 of the Sherman Act prohibits "every contract, combination . . . or conspiracy, in restraint of trade or commerce among the several states." 15 U.S.C. § 1. Accordingly, to establish federal jurisdiction under the Act, the defendant's conduct must involve activities that are either in the flow of interstate commerce or, "while wholly local in nature, nevertheless substantially affect interstate commerce." McLain v. Real Estate Bd. of New Orleans, 444 U.S. 232, 241, 100 S. Ct. 502, 508, 62 L. Ed. 2d 441 (1980). See Harold Friedman, Inc. v. Thorofare Markets, Inc., 587 F.2d 127, 132 (3d Cir.1978).
Gulf contends that all of its activities pertinent to this case stand outside the flow of interstate commerce. It rests this contention on the undisputed fact that Gulf gasoline is refined at the Philadelphia, Pennsylvania refinery for delivery to service stations in the eastern half of the state.
In Canadian American Oil Co. v. Union Oil Co., 577 F.2d 468 (9th Cir.1978) the Ninth Circuit confronted a Sherman Act, section 1 "in commerce" determination virtually identical to the one at bar. There, the appellant gas station owners received their allotments of Union Oil Company gasoline from an in-state refinery owned by Union. The court declared that "no detailed exegesis of Union's production, refining, transporting, [and] marketing . . . system is necessary to determine, as a matter of law, that Union's activities, including those in which it was engaged with the appellants," "occurred within the flow of interstate commerce" and supplied the necessary "interstate nexus." Id. at 471. I too am satisfied that Gulf's conduct of its business with plaintiffs -- involving contractually based deliveries of tens of thousands of gallons of gasoline each week -- was, "for jurisdictional purposes, an ingredient of [Gulf's] interstate production and distribution scheme." Id.
Even were I to find that Gulf's dealings with plaintiffs were "wholly local in nature," McLain, supra, 444 U.S. at 241, 100 S. Ct. at 508, I would nevertheless be compelled by Supreme Court case law to the conclusion that Gulf's alleged practices sufficiently affected interstate commerce to satisfy the alternative, "substantial effect" test for Sherman Act jurisdiction. See, e.g., Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S. Ct. 2004, 44 L. Ed. 2d 572 (1975); Hospital Building Co. v. Rex Hospital Trustees, 425 U.S. 738, 96 S. Ct. 1848, 48 L. Ed. 2d 338 (1976); United States v. Women's Sportswear Mfrs. Assn., 336 U.S. 460, 464, 69 S. Ct. 714, 716, 93 L. Ed. 805 (1949).
I turn next to Gulf's challenge to the court's jurisdiction over plaintiffs' claims under section 3 of the Clayton Act. 15 U.S.C. § 14. That section 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 the sale of goods . . . supplies, or other commodities . . . for use . . . or resale on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods . . . of a competitor or competitors of the . . . seller, where the effect of such lease, sale, or contract for sale or such condition, agreement or understanding may be to substantially lessen competition . . . in any line of commerce. 15 U.S.C. § 14.
In contrast to section 1 of the Sherman Act, the "distinct 'in commerce' language" of this provision of the Clayton Act, "appears to denote only persons or activities within the flow of interstate commerce." Gulf Oil Corporation v. Copp Paving Company, Inc., 419 U.S. 186, 195, 95 S. Ct. 392, 398, 42 L. Ed. 2d 378 (1974).
In Copp, the Court described Clayton Act, section 3's "in commerce" requirement as denoting "the practical, economic continuity in the generation of goods and services for interstate markets and their transport and distribution to the consumer." 419 U.S. at 195, 95 S. Ct. at 395; see also Swift and Co. v. U.S., 196 U.S. 375, 25 S. Ct. 276, 49 L. Ed. 518 (1905); Standard Oil Co. v. FTC, 340 U.S. 231, 71 S. Ct. 240, 95 L. Ed. 239 (1951). The considerations which prompted me to find that the Sherman Act's "in commerce" test was met in this case also persuade me that Gulf's dealings with plaintiffs fall within the kind of "practical economic" continuum which the court put forward as defining the scope of Clayton Act, section 3 jurisdiction.
Accordingly, I will reject defendant's affirmative defenses and proceed to consider its arguments for summary judgment on the merits of plaintiffs' antitrust claims.
Turning to plaintiffs' exclusive dealing claims, I will first assess the claim under section 3 of the Clayton Act. 15 U.S.C. § 14. I do so because that section imposes "stiffer standards of anticompetitiveness" upon exclusive dealing arrangements than does section 1 of the Sherman Act. American Motor Inns, Inc. v. Holiday Inns, Inc., 521 F.2d 1230, 1239 (3rd Cir.1975). Accordingly, if a plaintiff cannot establish that an exclusive dealing agreement infringed section 3 of the Clayton Act, the agreement "would, a fortiori, be lawful under the less restrictive provisions of the Sherman Act." Id. See Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 327, 335, 81 S. Ct. 623, 627, 632, 5 L. Ed. 2d 580 (1961).
The first inquiry I must undertake is whether exclusive dealing agreements or understandings in fact existed between Gulf and plaintiffs. Tampa Electric, supra, 365 U.S. at 329-30, 81 S. Ct. at 629. Gulf claims that undisputed facts demonstrate that no such agreements existed and that plaintiffs have mustered no evidence to the contrary. Gulf supports this assertion by reference to the written terms of its contracts with T.A.M. and E.L.G. which do not specifically delineate that the dealers buy their gasoline solely from Gulf, and by its letter of July 22, 1980 which purported to express Gulf's acquiescence in the dealers' purchase of products from Gulf competitors.
However, the plaintiffs have advanced evidence to suggest that despite the absence of express conditions in their contracts, de facto exclusive dealing agreements may have been in effect throughout the duration of their franchise relationships with Gulf. Depositions taken from Gulf's marketing agents, including its retail sales manager for the district of Philadelphia, indicate that they understood and acted upon the assumption that Gulf dealers were obligated to market Gulf gasoline alone. Whether or not an exclusive dealing contract existed is a material issue of fact in dispute, one which would be appropriate for jury consideration in determining whether an infringement of the Clayton Act has occurred. Viewing the evidence most favorably to the plaintiffs for the purposes of this motion, and taking into account the likely inequality of bargaining power between Gulf and its individual dealers, see Tire Sales v. Cities Service Oil Co., 637 F.2d 467, 474 (7th Cir.1980); Advance Business Systems & Supply Co. v. SCM Corporation, 415 F.2d 55, 63-64 (4th Cir.1969), cert. denied 397 U.S. 920, 90 S. Ct. 928, 25 L. Ed. 2d 101 (1970), it is clear that summary judgment on this issue in Gulf's favor is unwarranted.
In view of my obligation to read the evidence in a light most favorable to plaintiffs, I will assume, for purposes of this motion, that plaintiffs can prove not only that an exclusive dealing arrangement was imposed on them but also that Gulf imposed such agreements on all of its dealers in the Philadelphia area.
This assumption is critical for undertaking my second inquiry: whether the exclusive dealing agreements between Gulf and plaintiffs -- the existence of which I am now assuming -- were unlawful. In Tampa Electric, supra, the Supreme Court set forth a three-step analysis for evaluating the legitimacy of exclusive dealing arrangements under the Clayton Act:
First, the line of commerce . . . involved must be determined, where it is in controversy, on the basis of the facts peculiar to the case. Second, the [geographic] area of effective competition in the known line of commerce must be charted . . . . Third, and last, the competition foreclosed by the contract must be found to constitute a substantial share of the relevant market.
365 U.S. at 327-28, 81 S. Ct. at 627-628.
In this case, there is no dispute that the line of commerce involved is gasoline. The parties also agree that the relevant market area is greater Philadelphia.
Thus, whether summary judgment may be entered for Gulf with respect to the plaintiffs' Clayton Act, and by implication, their Sherman Act, exclusive dealing claims, depends upon consideration of the third step of the Tampa Electric analysis. To determine whether the exclusive dealing contracts in issue foreclosed competition in a substantial share of the relevant market,
it is necessary to weigh the probable effect of the contract on the relevant area of effective competition, taking into account the relative strength of the parties, the proportionate volume of commerce involved in relation to the total volume of commerce in the relevant market area, and the probable immediate and future effects which pre-emption of that share of the market might have on effective competition therein.
Tampa Electric, supra, 365 U.S. at 329, 81 S. Ct. at 629.
In addition, " Tampa Electric makes clear that in deciding whether an exclusive dealing contract violates section 3, the judiciary must take into account the economic justification for the arrangement." American Motor Inns, Inc. v. Holiday Inns, Inc., 521 F.2d 1230, 1251 (3d Cir.1975).
The statistical evidence bearing on whether a censurable foreclosure of competition may have occurred is not in dispute. Gulf's market share in the Philadelphia area is approximately 7%
which places Gulf sixth in market share size among the thirteen major gasoline suppliers in the area. Exhibit C-1, Defendant's Additional Briefing on its Motion for Summary Judgment. Of the approximately 3,000 gasoline stations in the area Gulf has 149 retail outlets or 5% of the total. These figures persuade me that even assuming that exclusive dealing agreements existed during the period embraced by the complaint, it is not likely that the agreements substantially lessened competition in the Philadelphia market.
Plaintiffs contend that a comparison of the facts here to those in Standard Oil Co. v. United States, 337 U.S. 293, 69 S. Ct. 1051, 93 L. Ed. 1371 (1949), should lead me to a contrary conclusion; it does not. In that case
the impact of the requirements contracts was studied in the setting of the large number of [Standard Oil] gasoline stations -- 5,937 or 16% of the retail outlets in the relevant market -- and the large number of contracts, over 18,000, together with the great volume of products involved. Tampa Electric, 365 U.S. at 328-29 [81 S. Ct. at 628-29] (distinguishing Standard Oil).