# Russ' Kwik Car Wash, Inc. Clean Cars, Inc. v. Marathon Petroleum Company Gastown, Inc. Emro Marketing Company

> Court of Appeals for the Sixth Circuit · September 5, 1985 · 772 F.2d 214

URL: https://www.frixlaw.com/law-library/cases/9473944

## Case

- **Full name:** RUSS’ KWIK CAR WASH, INC.; Clean Cars, Inc., Plaintiffs-Appellants, v. MARATHON PETROLEUM COMPANY; Gastown, Inc.; Emro Marketing Company, Defendants-Appellees
- **Court:** Court of Appeals for the Sixth Circuit
- **Decided:** September 5, 1985
- **Citations:** 772 F.2d 214; 1985 U.S. App. LEXIS 22717
- **Precedential status:** Published
- **Opinion:** Dissent by Kennedy
- **Judges:** Kennedy, Contie, Hillman
- **Cited by:** 263 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9473944

## How later opinions describe it (automated extraction)

- explaining that an intermediate court should affirm a district court’s decision “if correct for any reason, including a reason not considered by the lower court.”
- holding that the Robinson-Patman Act does not apply to sales between a petroleum company and its wholly owned subsidiary retail gasoline stations
- explaining Sherman Act § 1 “applies only to action by at least two separate entities”
- affirming summary judgment for defendant-appellee on reason argued below by defendant but not considered by the district court

## Opinion text

CORNELIA G. KENNEDY, Circuit Judge,
dissenting.
The earlier decisions of our Court require that we follow the control test. The existence of possible alternative rationales does not change the fact that the control standard was a vital link in the logical scheme actually used by this Court to decide both Parrish and Shavrnoch. Where the legal principles applied by this Court in a prior case differ from those applied by another Circuit, the rule of stare decisis requires that we follow the principles previously applied by this Court. Ashe v. Commissioner, 288 F.2d 345, 347 (6th Cir. 1961). “[I]t is the principle which controls and not the specific fact upon which the principle was decided.” Walker v. Georgia, 417 F.2d 5, 8 (5th Cir.1969). A prior decision of this Court is controlling authority unless overruled by this Court sitting en banc or inconsistent with a decision of the United States Supreme Court. See, e.g., Timmreck v. United States, 577 F.2d 372 , 376 n. 15 (6th Cir.1978), rev’d on other grounds, 441 U.S. 780 , 99 S.Ct. 2085 , 60 L.Ed.2d 634 , on remand, 600 F.2d 1228 (6th Cir.1979); Hutchins v. Woodard, 730 F.2d 953, 957 (4th Cir.), stay vacated, 464 U.S. 377 , 104 S.Ct. 752 , 78 L.Ed.2d 541 (1984); LeVick v. Skaggs Companies, 701 F.2d 777, 778 (9th Cir.1983); NLRB v. Datapoint Corp., 642 F.2d 123, 129 (5th Cir.1981). Accordingly, unless the control test is inconsistent with a decision of the Supreme Court, we must hold that a parent corporation is incapable, for Robinson-Pat-man Act purposes, of effectuating a “sale” to its wholly-owned subsidiary corporation only if the control test of Parrish is satisfied.
In Copperweld v. Independence Tube Corp., — U.S.-, 104 S.Ct. 2731, 2742 , 81 L.Ed.2d 628 (1984), the Supreme Court held that “the coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of § 1 of the Sherman Act.” I do not believe that the Supreme Court’s rationale in Copperweld requires the conclusion that a parent and subsidiary *222 are similarly a “single enterprise” for purposes of the Robinson-Patman Act. 1
The Supreme Court’s analysis in Copper-weld was based on the Sherman Act’s “basic distinction between concerted and independent action.” 104 S.Ct. at 2740, quoting Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752 , 104 S.Ct. 1464, 1469 , 79 L.Ed.2d 775 (1984). The Court's recognition of this crucial distinction permeates the reasoning which led the Court to reject the intra-enterprise conspiracy doctrine. The Court first contrasted § 2 of the Sherman Act, which governs single firm conduct but only when there is a threat of monopolization, with § 1, which does not require a threat of monopolization but regulates only concerted activity. The Court explained the reason for the difference between the two standards:
Concerted activity inherently is fraught with anticompetitive risk. It deprives the marketplace of the independent centers of decisionmaking that competition assumes and demands. In any conspiracy, two or more entities that previously pursued their own interests separately are combining to act as one for their common benefit. This not only reduces the diverse directions in which economic power is aimed but suddenly increases the economic power moving in one particular direction.
104 S.Ct. at 2741. The Court then reasoned that, although the language of § 1 is broad enough to cover coordinated conduct among officers of the same company, such combinations could not violate § 1 because: “The officers of a single firm are not separate economic actors pursuing separate economic interests, so agreements among them do not suddenly bring together economic power that was previously pursuing divergent goals.” 104 S.Ct. at 2741. The Court then held:
For similar reasons, the coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of § 1 of the Sherman Act. A parent and its wholly owned subsidiary have a complete unity of interest____ If a parent and a wholly owned subsidiary do “agree” to a course of action, there is no sudden joining of economic resources that had previously served different interests, and there is no justification for § 1 scrutiny.
104 S.Ct. at 2742. The Court rejected the “single entity” test, which measured criteria such as separate control of day-to-day operations, separate officers, and separate headquarters, because that test was “inadequate to preserve the Sherman Act’s distinction between unilateral and concerted conduct.” 104 S.Ct. at 2742 n. 18.
Unlike § 1 of the Sherman Act, the proscriptions of § 2(a) of the Robinson-Patman Act are not limited to concerted activity. A single seller violates § 2(a) by charging one purchaser a higher price than that charged the purchaser’s competitor. Although this requires the involvement of three parties, it is only the seller’s conduct that violates § 2(a). 2 Although one purchaser is favored by the seller, that favoritism is not necessarily the result of any collusion between the seller and the favored purchaser; § 2(a) prohibits price discrimination motivated by non-collusive economic reasons, such as a desire to favor a purchaser possessing large quantity purchasing power. See FTC v. Morton Salt Co., 334 U.S. 37 , 68 S.Ct. 822 , 92 L.Ed. 1196 (1948). Section 2(a) thus prohibits essentially unilateral conduct on the part of the seller. The competitive relationship between the purchasers is generally more important, for Robinson-Patman Act purposes, than the relationship between seller and purchaser. In Perkins v. Standard Oil Co., 395 U.S. *223 642, 648 , 89 S.Ct. 1871, 1874 , 23 L.Ed.2d 599 (1969), the Supreme Court held that § 2(a) could be violated where the favored purchaser bought from the defendant seller through a chain of two intermediaries, since “[f]rom [the disfavored purchaser’s] point of view, the competitive harm done him by [the seller] is certainly no less because of the presence of an additional link in this particular distribution chain from the producer to the retailer.”
The Supreme Court’s analysis in Copper-weld, cannot be applied to the Robinson-Pat-man Act. Copperweld’s rationale is essentially that § 1 of the Sherman Act guards against the anticompetitive danger caused by the collusion of what were formerly two separate economic actors, and that a parent and its subsidiary could not present such a danger because they already had a “complete unity of interest.” The Robinson-Pat-man Act, however, is not directed at the danger caused by the merging of separate interests. A price discrimination prohibited by § 2(a) is prohibited whether caused by collusion between seller and favored purchaser or by neutral economic factors. Section 2(a), like § 2 of the Sherman Act, prohibits certain conduct having anticom-petitive effects even when undertaken unilaterally.
I therefore conclude that the Parrish control test is not inconsistent with the Supreme Court’s decision in Copperweld . I would remand to the District Court for trial on the control test basis since I agree that the issue must be addressed in the first instance by the District Court.
. The Supreme Court in Copperweld did not consider the applicability of its holding to the Robinson-Patman Act. The Fifth Circuit in Security Tire & Rubber Co. v. Gates, 598 F.2d 962 , 965 (5th Cir.), cert. denied, 444 U.S. 942 , 100 S.Ct. 298 , 62 L.Ed.2d 309 (1979), expressly distinguished "the rather remote question whether a partially-owned subsidiary corporation could conspire with its parent corporation in violation of the Sherman Act.”
. A purchaser may be held liable for violating § 2(f) of the Robinson-Patman Act, 15 U.S.C. § 13 (f), if it knowingly induces or receives an unlawful price discrimination.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9473944. Public record. Not legal advice.