# Petition — Crown Central Petroleum Corp. v. Phillips > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1307%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1980 - **Citation:** 444 U.S. 1074 ## Text FILED NOV 26 1979 MICHASL IN THE Supreme Court of the United States OctoBeR TERM, 1979 No. 8°79 - 83] CROWN CENTRAL PETROLEUM CORPORATION, Petitioner, v. JOHN T. Pures, Jr., Conrado Frank TUMMINELLO, CHARLES Puiuip FRettaG and CARROLL CHARLES MYERS PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT JAMES H. KELLEY WiLuiAM D. APPLER ARTHUR WINEBURG MATTHEW WESTON-DAWKES Berason, BorKLAND, MarRGoLis & ADLER Eleven Dupont Circle, N.W. Washington, D.C. 20036 Telephone: (202) 462-5930 Morton A. Sacks CaBLE, McDAnreL, Bowle & Bonp One North Charles Street Baltimore, Maryland 21201 Telephone: (301) 752-3650 November 26, 1979 Press or Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C. TABLE OF CONTENTS Page EEE ees ere 2 I ns ska aces cde sivisicdcessccecs 2 SPPATUTES EBVORVED . oon cece cece econ. ee aas i es 3 SRE OP HE CRG anni c cca pawwccccccccccceses 3 REASONS FOR GRANTING THE WRIT ...........0+000005 7 Nee SUA Weweeerseeseesceae 17 TABLE OF AUTHORITIES CasEs: Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. IE TS Ee ee ee 15 Florida Power Corp. v. Granlund, 78 F.R.D. 441 (M.D. eee er khaphtebcnsencnness 11, 16 Gas-A-Tran of Arizona v. American Oil Co., 1977-2 Drees Cas, §G1,70e (DD. Aris. 1977) ... 2... even see 13 Gray v. Shell Oil Co., 469 F.2d 742 (9th Cir. 1972), cert. denied, 412 U.S. 943 (1973) ............6.. Hanover Shoe v. United Shoe Machinery Corp., 392 cide beh sea peste s sees aes 6, 12, 15 Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) .. 6, 7, 8, 9, 10, 12, 18, 15 In Re Fine Paper Antitrust Litigation, 82 F.R.D. 143 ota Cel kha ANd dence eescenes 11 In Re Independent Gasoline Antitrust Litigation, 79 ee EE I BOGE) voce caienccecsecocecce 5 In Re Sugar Industry Antitrust Litigation, 579 F.2d es ed eeckbescaceertes 11 Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 563 (3d Cir. 1979) ..........0000. 11 ii Table of Authorities Continued Page Phillips v. Crown Central Petroleum Corp., 376 F. Supp. 1250 (D. Md. 1973), permanent injunction granted, 395 F.Supp. 735 (D. Md. 1975), vacated, 506 F.2d 702 (4th Cir. 1977), affirmed, 602 F.2d 616 Co De Pyeerers ee creer ee rr eer eer 4 Phillips v. Crown Central Petroleum Corp., 426 F.Supp. SEA I OEE) in ood be eek pw ekadee ChEB ER Aes 5 The Hecht Co. v. Southern Union Co., 1979-1 Trade ee yas | er re rey een 11 STATUTES: Be ES WKAN OAs 655 CAE eee seG Lee kee Ek 3,4 Et gh) rere eee see ea eae ee weary ee ere 3,4 Be Se hing 654. vKih ed cawnedsanedsaeebaneaseuel 4 a EE ROS re ray ee wet Pek) Sark 4 Sy Se, MOR 5 ooh beb cee iach ho eee ven vesnens 2 MISCELLANEOUS: 2 Areeda & Turner, Antitrust Law § 334c ............ 16 _ mament, 47 Fordham L. Rev. 1025 (1979) .......... 9 S. Rep. No. 96-239, 96th Cong., 1st Sess. (1979) ...... 9 IN THE Supreme Court of the United States OctToBER TERM, 1979 No. 79- CROWN CENTRAL PETROLEUM CORPORATION, Petitioner, v. JoHN T. Puriuips, Jr., CorRaDO FRANK TUMMINELLO, CHARLES Puiuip FReITAG and CARROLL CHARLES MYERS PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT Crown Central Petroleum Corporation (Crown) petitions for a writ of certiorari to review the judg- ment and opinion of the United States Court of Ap- peals for the Fourth Circuit entered on July 2, 1979. 2 OPINIONS BELOW The divided opinion of the Court of Appeals (Pet. App. A, infra, pp. 1-36) is reported officially at 602 F.2d 616, and unofficially at 1979-2 Trade Cas. 1 62,743. The opinions of the district court on liability (Pet. App. OC, infra, pp. 38-190) and damages (Pet. App. D, infra, pp. 101-137) are reported officially at 395 F. Supp. 735 and 426 F. Supp. 1156, and unofficially at 1975-1 Trade Cas. 160,335 and 1977-1 Trade Cas. 1 61,396. JURISDICTION The court of appeals entered judgment on July 2, 1979. A timely petition for rehearing and suggestion for rehearing en banc was denied, one judge dissent- ing, on August 27, 1979 (Pet. App. B, infra, p. 37). The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED The district court found a conspiracy whereby deal- ers who purchased gasoline from Crown were required to charge artificially high retail prices to consumers, but it also found that there was no illegal agreement as to the wholesale prices charged by Crown and paid by the dealers. Nevertheless, the dealers were held entitled to recover damaget measured by the differ- ences between the wholesale prices they were actually charged and the wholesale prices which, it was as- sumed, they would have been charged if there had been no artificial increase in retail prices. The Court of appeals affirmed these findings and holdings. The question presented is: coca Sencnsabeanseroeanecainaaiaited aa aiiiall 3 Whether, in light of this Court’s decision in [/linois Brick Co. v. Illinois, 431 U.S. 720 (1977), prohibiting the offensive or defensive use of a ‘‘ passing on’’ dam- ages theory, gasoline dealers who were charged whole- sale prices that were not the object of any price-fixing conspiracy may recover overcharge damages from a gasoline refiner who conspired to fix retail selling prices, on a theory that the wholesale prices paid by the dealers were influenced by the retail prices they charged to consumers. STATUTES INVOLVED Section 1 of the Sherman Act, 15 U.S.C. 1, provides in relevant part: Every contract, combination in the form of trust or otherwise or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is declared to be illegal... Section 4 of the Clayton Act, 15 U.S.C. 15, states: Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sus- tained, and the cost of suit, including a reasonable attorney’s fee. STATEMENT OF THE CASE Petitioner Crown is an independent refiner and mar- keter of gasoline and other oil products which are sold to consumers primarily through dealer-operated sta- tions. Four of its dealers who had been threatened with 4 non-renewal of their leases brought suits for monetary damages and injunctive relief, alleging that Crown had consp:ed to stabilize both the retail prices for gaso- line cha. ged to consumers and the wholesale prices for that gasoline paid by its dealers.’ After a trial on liability, the district court concluded that Crown had entered into an unlawful agreement with its competitors to stabilize retail prices, and in furtherance of that agreement, had illegally controlled its dealers’ retail prices. Phillips v. Crown Central Petroleum Corp., 395 F. Supp. 735, 742, 746, 760 (D. Md. 1975) (Pet..App. C, pp. 46, 54, 83). The court, however, expressly found that ‘‘[n]o evidence was produced of similar agreements to fix wholesale prices, and this Court does not find that Crown engaged in a horizontal conspiracy to fix wholesale prices.’’ Id. at 757, n. 7 (Pet. App. C, pp. 77, n. 7). Although the dealers were not purchasers of gasoline at the fixed retail prices, the district court believed they had made a sufficient showing of ‘‘a direct causal connection’’ between the retail price fix and injury to themselves, reasoning that Had Crown not engaged in horizontal price- fixing with its competitors, the retail market in * This conduct allegedly violated §1 of the Sherman Act, and §§4 and 16 of the Clayton Act, 15 U.S.C. 1, 15, 26. Jurisdiction was assumed under 28 U.S.C. 1337. The district court entered a preliminary injunction against the lease terminations, Phillips v. Crown Central Petroleum Corp., 376 F. Supp. 1250 (D. Md. 1973), and permanent injunction, 395 F. Supp. 735 (D. Md. 1975), which was initially vacated, 556 F.2d 702 (4th Cir. 1977), and ultimately affirmed by the court of appeals, 602 F.2d 616, 629-31 (4th Cir. 1979) (Pet. App. A, pp. 21-25; Pet. App. ©, pp. 39-40, 100). No issue with regard to the propriety of the in- junction is presented here. pi Salih AaRS Matt all “i eitivichens sec aunancnuaeseaiaeaee 4) the Baltimore metropolitan area would not have been artificially stabilized. Increased competition would undoubtedly have led to lower retail prices and in turn to lower wholesale prices charged by Crown to plaintiffs. Id. at 768 (Pet. App. C., p. 98).? It determined the dealers’ injury should be measured as the difference between the actual wholesale prices they were charged and the reduced wholesale prices which presumably would have resulted if the retail price had been allowed to drop to competitive levels, Phillips v. Crown Cen- tral Petroleum Corp., 426 F. Supp. 1156, 1161-62, 1169 (D. Md. 1977) (Pet. App. D, pp. 107-110, 125).* The court of appeals, in approving the overcharge award as the proper measure of damages, concluded it was possible to determine the effect of the artificially high retail prices on the wholesale prices the dealers paid because, under Crown’s method for establishing wholesale prices, there was a predetermined relation- ship between those retail prices and the wholesale prices dealers were charged. Under this method, each 2 Paradoxically, the district court also based a damage award on the fact that: Plaintiffs also suffered injury when they were prohibited from raising their retail prices by Crown’s illegal vertical agreements. Their property was diminished by their inability to raise prices when they chose to do so, and each plaintiff thus suffered injury. Id., emphasis supplied. 8’The district court expressly rejected Crown’s argument that awarding damages to a party which had not paid the retail over- charge would subject Crown to possible double liability if, as was the case here, consumer plaintiffs who were the object of the price-fixing conspiracy brought a class action for damages. 426 F. Supp. at 1168, n. 16 (Pet. App. D, p. 123, n. 16); see In re Independent Gasoline Antitrust Litigation, 79 F.R.D. 552 (D. Md. 1978). 6 retail price increase of one cent resulted in ‘‘the deal- er’s gross profit margin [being] increased one-fourth of one cent while Crown’s wholesale price was in- creased by three-fourths of one cent.’’ Accordingly, the court decided that a wholesale overcharge per gallon could be computed from the illegally fixed retail price, and when multiplied by the gallons of gasoline each dealer sold would constitute the damages suffered. 602 F.2d at 632 (Pet. App. A, pp. 26-27).* Crown had argued that because the district court found only a conspiracy to fix retail prices, which were not charged to the dealers, their recovery could not be based on the retail overcharge but was limited in- stead to whatever lost profits they could prove. In this connection, Crown had observed that Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), did not address the right of recovery accruing to a purchaser at a level of distribution different from that at which the price was fixed (Crown Br. at 66-70; Crown Reply Br. at 22-25). Nevertheless, the court of appeals believed that Crown was simply asserting a ‘‘pass on’’ defense, and held that the decision in Han- over Shoe required its rejection. 602 F.2d at 633 (Pet. App. A, pp. 28-30). The court of appeals construed Illinois Brick Co. v. Lilinots, 431 U.S. 720, 735-36 (1977), as holding that *In contrast to its approval of ‘‘horizontal’’ damages passed back from the fixed retail price to the wholesale price, the court of appeals found the separate award of ‘‘vertical damages’’ to be “‘seriously flawed’’ and ‘‘without foundation’’ in the record. 602 F.2d at 634 (Pet. App. A, p. 30-34). The ‘‘vertical damages’’ were based on the district court’s conclusion that Crown’s refusal to let its dealers sell at a price above the fixed price reduced their profits, and the court of appeals pointed out that this contra- dicted the basis for the award of overcharge damages. /d. Peed ahh eS A ote MR tei th 7 a purchaser who buys at a price which bears some re- lationship to the fixed price at another level of the distribution chain, can recover overcharge damages if his purchase is made directly from a party to the con- spiracy. On that ‘‘passing back’’ basis, it concluded that these dealers were appropriate parties to recover part of the retail overcharge, despite its earlier finding that the dealers had clearly benefited from the con- spiracy : Since the higher the price the wider the dealer’s margin, each dealer had a substantial incentive to comply with Crown’s directions about retail prices, and there was no counter incentive since there was general agreement that maintenance of these prices did not cause a loss of retail sales. 602 F.2d at 632 (Pet. App. A, p. 26-27). REASONS FOR GRANTING THE WRIT The court of appeals’ decision stands Illinois Brick squarely on its head by allowing a purchaser who is only indirectly affected by a fixed price charged else- where in the distribution chain to recover a part of the resulting overcharge by ‘‘passing back’’ that over- charge to his concededly unfixed price. Such recovery by the indirectly injured individual is completely at odds with Illinois Brick’s admonition that only the direct purchaser at the illegal price is a proper party to sue, that such direct purchaser is entitled to the entire overcharge, and that no one else may recover any part of the overcharge even though it indirectly affects the price the other party paid. As well, the result reached here will create the same policy difficulties that led this Court to fashion the 8 Illinois Brick rule. The court must perform the dif- ficult and uncertain analysis of tracing the retail over- charge back through the distribution chain and then measuring its impact upon the wholesale price; a sub- stantial risk of double recovery is created since the *‘passing back’’ defense would apparently not be avail- able to Crown in suits by direct purchasers at the fixed retail price; and there will be a diminished basis for private enforcement of the antitrust laws since the recovering party normally will have little incentive to bring suit because he benefits by receiving the fixed retail price.® 431 U.S. at 729-47. Clearly, such a substantial departure from the hold- ing of and policies behind Hanover Shoe and Illinois Brick warrants review by the Court. Given the fre- quency of resale price maintenance schemes, the right of a middleman in the distribution system, who comes between the price-fixing manufacturer or distributor and the party who pays the overcharge directly, to a portion of the illegal overcharge is an important and recurring one. Illinois Brick suggests that recovery in circumstances similar to that here should be barred (431 U.S. 736, n. 16), and this case is an appropriate one to recognize that fact. Moreover, insofar as the court of appeals’ decision permits recovery by a party dealing directly with the price-fixer and bars recoverv by the other parties who actually paid the full amount of the illegal overcharge, it is flatly in conflict with several decisions allowing such purchasers to recover. *The dealers here brought suit only because of the happen- stance that they were threatened with termination of their leases, and the principal focus of the case in its initial stages was injune- tive relief to prevent these terminations. Ce Oe Te eee Oe ee ee Te ee Le SOA RL ER CN INE a AB ae i en lly STN se —— ee, OE Oe See OR Ee, Carew er anes ae vant Sine 9 1. This Court held in Illinois Brick that, regardless of whether their prices were affected by the price- fixing scheme, indirect purchasers were not entitled to sue for a portion of the illegal overcharge passed on to them. Instead, only ‘‘the overcharged direct pur- chaser, and not others in the chain of manufacture or distribution, is a party ‘injured in his business or prop- erty’. ..’’ and thereby entitled to recover the full amount of the overcharge. 431 U.S. at 729. Although Illinois Brick and Hanover Shoe each involved a factual situation in which the conspirators who fixed the prices also were the parties who made the sales at those prices, with the consequence that only a party purchasing directly from members of the conspiracy could qualify as ‘‘the overcharged direct purchaser’’, this does not justify a conclusion that this Court was establishing a rule restricting recovery to purchasers in privity with a conspirator, rather than a policy of broader applicability.* Clearly, the party * Significantly, much of the criticism of Jllinois Brick proceeds directly from the incorrect assumption that a rule of privity was established there. For example, the Majority Report accompany- ing S. 300, the Senate Bill that would reverse Illinois Brick, clearly expressed such an understanding: Subsection 4I(1) explicitly overrules the holding of Illinois Brick Co. v. Illinois, supra, by removing the artificial requi- site of ‘‘privity’’ between the plaintiff and the defendant in an antitrust action. S. Rep. No. 96-239, 96th Cong., Ist Sess. 34 (1979). Many com- mentators have pointed out that such a rigid ‘‘privity’’ rule does not properly serve the policies underlying either Section 4 of the Clayton Act or Jllinois Brick itself in all factual contexts. See, e.g., Comment, Congressional Authorization of Indirect Purchaser Treble Damage Claims: The Illinois Brick Wall Crumbles, 47 Fordham L. Rev. 1025 (1979). 10 who purchases at the fixed price satisfies the policy concerns (see below) that were the basis for Illinois Brick, regardless of whether he purchased from a member of the conspiracy or from a seller who had been compelled by the conspirators to charge the higher price. Cf. 431 U.S. at 736, n. 16. The fact that the purpose of the conspiracy is to fix prices charged by sellers who are not members of the conspiracy does not affect in any way either the nature of the injury suffered by the purchaser who pays the fixed price or the relative ease of computing such purchaser’s damages. On the other hand, construction of the term ‘overcharged direct purchaser’’ as meaning only the purchaser who buys from a member of the conspiracy, rather than the purchaser who buys at the fixed price, without regard to who is the seller, leads to a direct conflict with the policy concerns expressed in Illinois Brick. It is submitted that Illinois Brick establishes a rule of policy which permits recovery by the party who suffers the direct injury by first paying the illegally fixed price, and bars recovery by those who are injured indirectly by the incidental effects of that illegal price on other prices. A party who purchases directly from a member of the conspiracy, but who does not pay the illegal price, is only injured indirectly and therefore is not entitled to share in the recovery any more than the indirectly injured plaintiffs in I/linois Brick were entitled to a share. The court of appeals’ decision allowing recovery here not only conflicts with the rationale of Illinois Brick but is inconsistent with other lower court decisions recognizing that Illinois Brick extends beyond the particular facts of that case. The Third Circuit has snabeiciiesdeaisai 11 permitted recovery of an overcharge by a plaintiff who did not purchase directly from a member of the con- spiracy but instead purchased from a wholly-owned subsidiary of one of the members. In re Sugar Indus- try Antitrust Intigation, 579 F.2d 13, 18-19 (3d Cir. 1978). (‘To adopt any other view would invite eva- sion’’ of the antitrust laws.) Subsequently, the same court held that a purchaser from a subsidiary could recover for the overcharge when it can ‘‘establish facts that warrant holding [the parent] legally ac- countable for [the subsidiary’s] activities in that as a consequence of [the parent’s] domination, the subsidi- ary’s prices were determined in accordance with the general price-fixing conspiracy.’’ Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 563, 589 (3rd Cir. 1979) ;’ Cf. The Hecht Co. v. Southern Union Co., 1979-1 Trade Cas. 162,647 at 77,655 (D. N.M. 1979); Florida Power Corp. v. Granlund, 78 F.R.D. 441, 443-4 (M.D. Fla. 1978). These decisions simply cannot be reconciled with the approach adopted by the Fourth Circuit. The plaintiff-dealers here, though purchasing directly from Crown, were not charged the fixed retail price, and in- stead only paid wholesale prices which were influenced by the fixed retail price. These plaintiff-dealers resold at the fixed retail price, as required by Crown, and it was their customers who paid the full amount of the * See also In re Fine Paper Antitrust Litigation, 82 F.R.D. 143, 153 (E.D. Pa. 1979) (‘‘[T]he existence of defendant-owned subsidiaries and the participation by those subsidiaries in an over- all horizontal conspiracy among mill defendants may be relevant to the determination of whether purchasers from those subsidi- aries are direct purchasers for purposes of inclusion in the nation- wide direct purchaser class ...’’). 12 illegal overcharge. The court of appeals, however, mis- construed the ‘‘direct purchaser’’ language of Illinots Brick to mean that only a party who purchased di- rectly at the price fixed by the conspiracy was entitled to recover. This error—allowing the dealers to recover on the basis of the retail overcharge they did not pay —required tracing the effect of the retail price fix to the wholesale prices paid by the dealers as the means of determining how much of the overcharge was ‘passed back’’ to them, the very problem that led this Court to fashion the rule of Illinois Brick. 2. This decision permitting recovery by a dealer who was not the purchaser at the illegally fixed price nulli- fies the policies on which Illinois Brick expressly rests. First, it was this Court’s perception there and in Hanover Shoe that there would be substantial ‘‘uncer- tainties and difficulties in analyzing price and out-put decisions ‘in the real economic world rather than an economists’ hypothetical model’ ’’, so that ‘‘the costs to the judicial system and the efficient enforcement of the antitrust laws of attempting to reconstruct those decisions in the Courtroom’’ were unacceptable. 431 U.S. at 732, 737, 741-743. The difficulties of tracing the effect of retail prices ‘‘passed back’’ to some impact earlier in the distribution chain, as here, are no less than those involved in determining how much of an impact was ‘‘passed on’’ in Illinois Brick. Nevertheless, the court of appeals approved a trac- ing backward from the retail overcharge to a presumed wholesale overcharge based upon a relationship be- tween retail and wholesale price increases during the conspiracy period. This approach required the assump- tions that this fixed relationship would not have ex- 13 isted in the absence of the conspiracy and that, except for the conspiracy, a dealer who charged a higher re- tail price would have been charged the same wholesale price as a dealer who charged a lower retail price, an assumption not shown to be true. In any event, this type of economic assumption is precisely the sort of analysis which Illinois Brick eschewed. Second, this Court decided in Jilinois Brick to for- bid the use of ‘‘pass-on’’ theories because the alterna- tive, allowing parties other than the directly over- charged purchaser to recover, raised ‘‘the possibility of inconsistent judgments obtained by conflicting claim- ants .. .’’ 431 U.S. at 737, n. 18. Now the court of appeals, by approving a ‘‘passing back’’ of the retail overcharge, has resurrected the possibility of incon- sistent judgments. Another court, faced with a suit by the dealers’ customers against Crown, could easily conclude that those customers, the direct purchasers at the fixed price, were entitled to recover the full amount of the retail overcharge which they unquestion- ably paid. See Gas-A-Tron of Arizona v. American Oil Co., 1977-2 Trade Cas. 1 61,789 at 73,245 (D. Ariz. 1977). Crown would have no assurance that it could use the ‘‘ pass back’’ defensively in such a suit to reduce the customers’ recovery from it. The court of appeals decision, therefore, exposes Crown to the possibility of being held liable for the same overcharge to both the dealers and their customers, ‘‘a serious risk of multi- ple lability’? for Crown which Illinois Brick sought to avoid. 431 U.S. 730.° * There is a related difficulty with the court of appeals’ ap- proach. Offensive use of a passing-back theory was expressly permitted to demonstrate and measure the effect of the over- charge on the dealers’ wholesale prices. Yet, disregarding the 14 Third, this Court believed that allowing suits by direct purchasers who could recover the full amount of the overcharge best served ‘‘the longstanding policy of encouraging vigorous private enforcement of the antitrust laws.’ 431 U.S. at 745. Disregarding, this . policy, the court of appeals has actually weakened pri- vate antitrust enforcement by allowing the dealers to recover on the basis of the retail overcharge. Assum- ing that the court of appeals would not countenance multiple liability for Crown, the dealers’ customers have been removed as potential plaintiffs. Yet the dealers, the only parties who can recover for the over- charge, have little incentive to sue unless their dealer- ships are in danger of being terminated, because their profit margins are augmented by the conspiracy. More- over, the dealers cannot recover the entire retail over- charge, since only part (34) can be traced back to their wholesale price. Finally, the court of appeals’ decision is difficult to reconcile in light of its assumption that retail sales remained constant despite the higher fixed price. 602 F.2d at 632 (Pet. App. A, pp. 26-27). Since the dealers shared in the increased prices their total profits were higher under the conspiracy than they would have been under competitive conditions. To award the deal- ers substantial damages under these circumstances is clear directive of /dfinois Brick that ‘‘pass-on’’ type theories must be available for both offensive and defensive use, the court did not allow Crown to use the same methodology to contest whether the dealers had suffered any injury. Such a ruling is patently unfair, especially in this case where the court of appeals observed that a pass-on of any wholesale overcharge was ‘‘insisted on’’ by Crown and the dealers’ own damages proof assumed no loss of gallonage from the alleged conspiracy. 602 F.2d at 632, 633 (Pet. App. A, pp. 26-27, 28). * 15 to ignore the language of Clayton Act § 4, which re- quires that a person ‘‘be injured in his business or property”’ to recover. See, e.g., Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 486-87 (1977) ; Gray v. Shell Oil Co., 469 F.2d 742, 748-49 (9th Cir. 1972), cert. denied, 412 U.S. 943 (1973). In contrast to the adverse effect on Illinois Brick policies which results from the court of appeals’ deci- sion, these policies are furthered if the parties who actually paid the illegally fixed price, rather than these middleman dealers, are deemed the appropriate parties to recover the overcharge.’ The customers would be entitled to recover the entire amount of the overcharge, 50 “the amount of the recovery would reflect the actual injury suffered’? and there would be no need for complex tracing and allocation procedures. They would thus have the strongest incentive to sue, along with any dealers threatened with termination for noncompliance with the illegal scheme. Consequently, there would be two groups of potential plaintiffs, together able to recover for all the harm flowing from the conspiracy, but without the danger of multiple liability. 3. This is an appropriate case to resolve the reach of Illinois Brick in circumstances where, unlike that case and Hanover Shoe, the party which dealt directly with the conspirator was only indirectly injured (if at all), while the directly injured party did not purchase from the defendant. We submit that the court of ap- peals, through ‘‘{uJndue emphasis on privity’’, has awarded damages based on the retail overcharge to the * While the dealers should still be permitted to recover dam ges ° . a in the amount of their lost profits due to the conspiracy, it was undisputed in this case that there were no such losses. 16 wrong party,” and in so doing, has violated virtually every important precept of Illinois Brick, which should apply here despite the slightly different fac- tual context of this case.” In particular, this case involves a factual situation which is recurrent: resale price maintenance where the resale price is fixed by the reseller’s supplier. If (as the court of appeals concluded) the reseller is the proper party to bring suit, those customers who actu- ally paid the fixed price will presumably be left with- out a remedy. The ‘“‘result would be a loophole in the antitrust laws that would provide immunity for any price-fixing manufacturer which, for whatever rea- sons, finds it useful to conspire to fix prices’’ with its resellers. Florida Power Corp. v. Granlund, supra, 78 F.R.D. at 444. 10 See 2 Areeda & Turner, Antitrust Law § 334¢ at 165 (1978). 11 The dealers were permitted to recover, based on a complicated ‘‘passing back’’ calculation, without making any showing that they suffered injury as a result of the conspiracy and in the face of their concession that they benefited from the conspiracy. The dealers’ customers, who were clearly injured in the full amount of the overcharge and have a strong incentive to sue, would ap- parently be barred from recovery unless Crown is to be exposed to multiple liability. Crown may be subject to multiple liability in any event, if another court decides the dealers’ customers can re- cover the overcharge, since Crown cannot use the ‘‘trace back’’ defensively. Even if multiple liability could be completely avoided by tracing and allocating the retail overcharge, such a procedure is precisely what Illinois Brick was designed to avoid. 17 CONCLUSION For the foregoing reasons, the petition for a writ of certiorari should be granted. Respectfully submitted, JAMES H. KELLEY WILLIAM D. APPLER ARTHUR WINEBURG MATTHEW WESTON-DAWKES BeEroson, BorKLAND, MarGoLis & ADLER Kleven Dupont Circle, N.W. Washington, D.C. 20036 Telephone: (202) 462-5930 Morton A. Sacks CaBLE, McDantet, Bowie & Bonp One North Charles Street Baltimore, Maryland 21201 Telephone: (301) 752-3650 November 26, 1979 APPENDIX la APPENDIX A Untrep States Court or APPEALS, Fourts Circuit. Nos. 77-1780, 78-1078. Joun T. Puriurps, Jz., Corrapo Frank TuMMINELLO, CuHarLEs Puiip F'Re1TaG, aND CarRoLL CHARLES MYERs, Plaintiff s-A ppellees, v. Crown CentTRAL PetroLeuM CoRPORATION, Defendant-A ppellant. Argued Oct. 2, 1978. Decided July 2, 1979. Before Haynswortu, Chief Judge, Cowrn,* Senior Judge, and WipENER, Circuit Judge. Cowen, Senior Judge: Defendant Crown Central Petroleum Corporation (Crown), is an independent wholesaler of gasoline and other oil: products in the Maryland marketing area. Plain- tiffs are four of Crown’s independent dealers. The plain- tiffs brought private antitrust actions against Crown, charging violations of 15 U.S.C. §§1, 15, and 26 (§1 of the Sherman Act, and §§4 and 16 of the Clayton Act). The complaints alleged that Crown entered into a horizontal conspiracy with its competitors to stabilize the retail price of gasoline in Maryland; that Crown forced its independent dealers into a vertical price-fixing agreement to control the retail price of gasoline; that Crown entered into tying * Wilson Cowen, Senior Judge of the Court of Claims, sitting by designation. 2a agreements with its dealers which required that only Crown brands of motor oil could be sold, and that these conspiracies and agreements supported and reinforced each other to create an elaborate and pervasively illegal system of reduc- ing competition and restraining trade in the Maryland gaso- line market. After a trial, the district court found Crown _liabie on most of these charges and issued an injunction which required the defendant to enter into new 3-year leases with each of the plaintiffs and forbade Crown from cancel- ling the leases (or refusing to renew them) for any retalia- tory or illegal reason. The determination of money damages was reserved for a separate trial. Three days after the permanent injunction issued, the attorney for the plaintiffs notified the court that one plain- tiff, Corrado Frank Tumminello, had committed perjury, both in pretrial proceedings and during the course of the trial. Tumminello had also fabricated business records to support his perjured testimony. Crown moved for various forms of relief based on the discovery of perjury; but the district court, after considering the motions and the evi- dence, reaffirmed all of its previous actions except the per- manent injunction (which was vacated with respect to Tumminello to protect “the integrity of the court” and otherwise continued) and one finding of fact (which was stricken). Crown appealed to this court all of the district court’s rulings in favor of the plaintiffs. While this appeal was pending, the district court held a separate trial to determine the quantum of money damages. On February 17, 1977, the court awarded plaintiffs total treble damages of $434,310 and attorneys’ fees of $200,000. Phillips v. Crown Central Petroleum Corp., 426 F.Supp. 1156 (D.Md.1977). An appeal from the damage award followed. In Phillips v. Crown Central Petroleum Corp., 556 F.2d 702 (4th Cir. 1977), we vacated the permanent injunction without prejudice and remanded the case to the district 3a court with instructions to hold a hearing regarding the extent of Tumminello’s perjury. Consideration of all the other issues on appeal was stayed pending the outcome of this hearing, which was held on July 22, 1977. After the hearing the district court struck some of its findings of fact, but reaffirmed its previous decision in all important respects. Crown now appeals against to this court, challeng- ing the manner in which the remand hearing was conducted and renewing its appeals on all the previous rulings of the district court. I. The Remand Hearing We turn first to the objections raised by the defendant to the proceedings on remand from the original appeal. To understand the posture of this aspect of the case, some factual background is necessary. Plaintiff Tumminello testified at trial and in pretrial proceedings to several events which tended to prove the existence of a horizontal conspiracy among Crown and its competitors to fix prices. According to his testimony, he had on at least four occasions refused to raise his retail gasoline price when instructed to do so by Crown representatives. Those representatives told him at those times that he had to raise his price because his delay was “screwing up the arrangement” with the other oil companies. This testimony poo the basis for several of the district court’s findings of fact. After the first permanent injunction issued, an account- ant examining Tumminello’s business records was unable to square the written account books with Tumminello’s story of one of the episodes described above (the one al- leged to have taken place on April 24, 1971). Tumminello finally admitted to his counsel that he had lied about the incident; destroyed the genuine business records for that day, and fabricated new records that would support his false story. He continued to stand by his other testimony. 4a The defendant filed motions pursuant to Rules 52(b), 59(a), and 60(b) of the Federal Rules of Civil Procedure, asking the court to dismiss all of the claims of every plain- tiff, or to grant a new trial or other extensive discretionary relief. The district court simply struck the finding of fact which dealt with the spurious incident and reaffirmed its judgment in all other respects. On appeal from this deci- sion, we stayed consideration of the merits of the case until the district court could conduct a “plenary hearing,” “re- appraise the case,” and then determine the appropriate findings and conclusions. Phillips v. Crown Central Petro- leum Corp., supra, 556 F.2d at 705. By so doing we inti- mated no view on the soundness of the conclusion reached by the district court (a finding that the perjury was limited and did not infect large areas of the case); we simply in- structed the court to hear Tumminello ore tenus and receive such other evidence as might be required to assess the full impact of the perjury on the case as it stood. The remand hearing took place July 22, 1977. Prior there- to Crown took a 2-day deposition of Tumminello and this was offered in evidence. However, Crown had previously indicated that it did not intend to call Tumminello to testify but would rely instead on his deposition. In view of the explicit directions from this court, the district court di- rected plaintiff to call Tumminello, who testified and was cross-examined extensively in open court by Crown. Crown also called as a witness, Mr. Barry Owens, an employee of Crown’s counsel, who had performed the analysis of Tum- minello’s records. Crown introduced exhibits and a deposi- tion in testimony. The trial court denied the requests of both parties to call a large number of witnesses on the issue of horizontal price fixing on the ground that such action would transform the remand hearing into a new trial. The trial judge also denied Crown’s request to recall to the stand several of Crown’s witnesses who had testified in the 1974 trial, plus another witness, James C. Blackman, who had testified previously only by deposition. The court con- 5a cluded that the hearing of such testimony was not required by our order. In an opinion filed August 19, 1977, the dis- trict court denied all of Crown’s post-trial motions and re- affirmed the court’s former findings and conclusions, except for two findings of fact which were stricken in view of the testimony given at the remand hearing. The defendant raises several objections to the conduct of the remand proceedings. Most of them can be traced to a disagreement over the precise nature of the hearing con- templated by this court when we issued the remand order. The district court enunciated in this way the question to be answered at the hearing: The question ultimately presented at the remand hearing was essentially a narrow one, namely, whether Tumminello is now telling the truth or whether he is now lying in confirming on the stand under oath sub- stantially all his prior testimony. * * * The defendant argues that this approach is somehow in- consistent with our instruction to “reappraise the case and * * * determine the appropriate findings and conclusions” in light of the evidence adduced at the hearing. We do not agree. The difficulty we found with the case on the first appeal was that the trial judge had not heard testimony from Tumminello since the disclosure of his perjury and it was uncertain how pervasive his perjury may have been. Therefore, we were reluctant to affirm findings of fact based, in part at least, on the testimony of an admitted perjurer until Tumminello was examined ore tenus and the district court had an opportunity to reassess his testimony. On review, we find that the purpose of the remand order was fulfilled to the extent that no reversal is required on account of the conduct of the remand hearing. The trial court’s refusal to again hear four Crown witnesses who were implicated in varying degrees by Tumminello’s testi- mony was not error, since the district court had previously 6a found their testimony uncorroborated, and since only one of them, John W. Conway, was involved in the particular incident which Tumminello admitted he had fabricated. To put it in another way, the district court would have been required to hear these witnesses again only if Tumminello’s perjury extended into areas other than those covered by his frank admission. Since the trial judge decided that the re- mainder of Tumminello’s testimony was credible, he had no need to rehear the testimony of these witnesses.’ Taking a slightly different tack, Crown argues that on remand the district court should have applied the maxim Crown argues strenuously that the district court erred in re- fusing to hear in open court the testimony of James C. Blackman, one of the witnesses Crown wished to call at the remand hearing to refute Tumminello’s testimony. Blackman testified at the trial only by deposition, and the trial judge never had an opportunity to observe his demeanor on the stand. But the conflict between Tumminello and Blackman was very limited, and may have been nonexistent. Tumminello testified that on some occasions Black- man told him that pricing arrangements had been made with the other independent oil companies. Blackman denied making those statements. The only evidence of the statements other than Tum- minello’s direct testimony was a notation made by him after a telephone call with Blackman, which recorded that Blackman had told him that ‘‘everybody is going up.’’ Tumminello later ad- mitted that he would interpret such a statement to mean that there was a pricing agreement with competiors, so both witnesses may have been telling the truth. Furthermore, Blackman’s sup- posed conflict with Tumminello closely resembled the conflicts be- tween Tumminello and several other Crown witnesses who gave live testimony; the trial judge gave no credence to the testimony of any of those witnesses, and there is no reason to believe that one more witness repeating the same tale would have any further effect on the judge’s determination of credibility. Finally, Crown could have presented Blackman in person at the first trial as a witness if his testimony on this point had been as important as Crown now claims it was. For all these reasons, we are persuaded that although the trial judge might have been wiser to hear Black- man in person, he did not commit reversible error by refusing to do so. 7a falsus in uno, falsus in omnibus, reinforced by the judicially enunciated observation that “intentional falsification of ma- terial records presumptively destroys the weight of the offender’s evidence as to the entire case.” Gratsos v. Moise Bay, 287 F.2d 706, 707 (4th Cir. 1961). Crown argues that the testimony which Tumminello admitted was false dif- fered in no material respect from much of his other testi- mony, and that therefore all of that other testimony should be regarded as suspect until corroborated. Even if we were inclined to utilize the maxim cited above, which this court has at various times labeled “worthless,” [Virginia Ry. Co. v. Armentrout, 166 F.2d 400, 406 (4th Cir. 1948)], “inap- propriate,” [United States v. Harris, 346 F.2d 182, 185 (4th Cir. 1965)], and “always treacherous,” [Phillips v. Crown Central Petroleum Corp., supra, 556 F.2d at 705], we would not adopt the defendant’s reasoning, since the maxim has always been purely informatory, never manda- tory. Norfolk and Western Ry. Co. v. McKenzie, 116 F.2d 632, 635 (6th Cir. 1941). The district court could have de- cided, on the basis of Tumminello’s perjury, that he was unworthy of belief on other points as well. The court did not choose to do so, and we cannot say on the record before us that the refusal was error. The court found the rest of Tumminello’s testimony to be substantiated and corrobor- ated by other evidence of record, and we conclude that Crown has failed to show that the district court’s findings on these issues are clearly erroneous. Crown’s other objections to the conduct of the remand hearing—that it was scheduled at a time inconvenient to Crown’s. counsel, that prehearing discovery was not as extensive as it might have been, and that the videotape of Tumminello’s remand deposition should have been received in evidence—all pertain to maters traditionally left to the trial judge’s informed discretion, and we decline to disturb such rulings absent a showing of abuse. That showing was not made here. 8a II. The Horizontal Price-fixing Findings Since we find that no reversible error was committed in the conduct of the remand hearing, the remaining issues must be decided on the record as finally reaffirmed by the trial judge after that proceeding. We have reviewed that ample record, assisted by able briefs from counsel for both sides, and we find therein sufficient evidence to support the trial judge’s findings that a horizontal conspiracy to fix prices existed and that Crown participated in that con- spiracy. Several employees and officers of Crown testified to tele- phone calls between Crown and its competitors; the subject of those calls was retail pricing. Wilbur Pressler, Crown’s Manager of Administration (Marketing), testified that he called Ashland Oil and Refining Company and Meadville Oil Company about the retail prices being charged by some of . those companies’ gas stations, because those stations “were engaged in price competition that could seriously affect sales of the Crown station” near them. Pressler came close to admitting that his motive for making those calls was to stop the price competition among the retail gas stations concerned. Pressler also testified that he received phone calls from the Society of Independent Gasoline Marketers of America (SIGMA) concerning future retail price moves in the Maryland gasoline market. Pressler believed these calls to be “improper,” and testified that he did not encour- age SIGMA, but the calls continued. Crown itself was not a member of SIGMA. Archie Garrison, who was Pressler’s predecessor as Manager of Administration, also admitted that he made telephone calls to competitors to discuss retail prices being charged by particular gas stations. Garrison called Hess Oil Company when Hess stations were hurting Crown sales by posting lower prices, asking Hess officials to “look into it.” James C. Blackman, Crown’s Mid-Atlantic Regional Office Manager, acknowledged that he had called officers of Petroleum Marketing Corporation (PMC), an- 9a other Crown competitor, asking them when PMC was plan- ning to change its retail prices. Joseph J. Gilboy, Crown’s Virginia District Manager, testified that he had received calls from PMC, asking him to raise Crown’s retail gasoline prices and informing him in advance of PMC’s price moves. When asked whether he returned calls to PMC, Gilboy equivocated. Telephone records confirm the placing of calls between Crown and each of the competitors mentioned here. These calls were verified by the testimony of the officers of the competitors who participated in them. Irving Gross- man, Price Coordinator for Hess, testified that he received calls from Crown and other oil companies informing him of prospective retail pricing actions, and understood these calls to be explanations of those actions. Henry R. Wain- wright, Vice President of PMC, admitted that he made calls to the other oil companies to discuss future price moves and stated specifically that he talked to John W. Conway of Crown about pricing in the Maryland area. Other evidence in the record lends support to the dist: ict court’s findings. Tumminello’s testimony (which was found credible by the trial judge) that officers of Crown had told him of an agreement with the other oil companies is cor- roborated by the testimony of Earl Burch, a Crown sales representative, who stated that he also received this in- formation from his superiors at Crown. On several occa- sions, Blackman was able to predict the day and hour of competitors’ price changes, since he sent field agents to watch other gas stations to see whether the price changed when he thought it would. Blackman’s explanation for his prescience was that his knowledge was “based on compe- petition in the area, what we had seen * * *.” Finally, there was the testimony of Howard Knox. We have reserved dis- cussion of Knox’s testimony to the end of this review of the evidence, because it is vigorously assailed by Crown. 10a Howard Knox was Administrative Aide and secretary to two vice presidents of PMC, Wainwright and Ferguson. Knox testified that the vice presidents for whom he worked called all the independent dealers, including Crown, just before a planned price hike to find out whether the other dealers were going to “go along” with it. He was in a posi- tion to hear the officers actually speaking with the other conspirators. These telephone calls took place during 1970 and 1971, while Knox was working for PMC. Knox himself took some messages from other independents to relay to his superiors, and he testified that he took such a message from Crown. Knox stated that he called Crown himself “six or seven times” to advise Crown of proposed changes in gaso- line prices. The district court, in finding the existence of a horizontal conspiracy, accorded “particular weight” to Knox’s testimony. Crown attacks Knox’s testimony on several grounds. First, no particular dates for any of the phone calls Knox described were given, nor could Knox recall the details (as opposed to general tenor) of the price-fixing communica- tions. Crown also suggests that Knox had a “bone to pick” with one of his superiors at PMC, implying that he had a strong motive to fabricate damaging testimony. Both of these objections, however, relate to the credibility of the witness, and the district court resolved them adversely to Crown. In the light of the whole record, we decline to upset the trial judge’s resolution of these issues. Crown’s frontal attack on Knox is based on his subse- quent testimony in other proceedings, particularly a depo- sition taken in a subsequent civil action against PMC. Counse} for Crown attended the deposition and participated in the cross-examination, apparently for the purpose of discrediting Knox and obtaining ammunition to use in the present proceeding. Four salient points emerge from this deposition : lla 1. In his testimony before the trial judge in the present case, Knox said that he had no ill feelings at all toward any representative of PMC. In his deposition, he admit- ted that he had ill feelings toward Mr. Ralls of PMC. To that extent, his testimony before the district court in the present case was false. 2. Knox was confronted at the deposition with tele- phone records and company price-changing records for the periods of time he was employed by PMC and was unable to correlate particular price changes with par- ticular telephone calls to competitors. The strong impli- cation, according to Crown’s counsel, was that such a correlation was impossible, but without the records before us we cannot resolve the question. 3. Knox testified before the district court in the pres- ent case that he telephoned Crown to suggest price changes and that Crown representatives would later call him back to give their assent. In his deposition he admitted that, many times, the assent would be given in the same conversation. To that extent, his testimony before the district court in this case conflicted with the deposition. 4. Knox stoutly reaffirmed in his deposition that the calls he described actually took place largely as he had explained them in this case. The district court ruled that the deposition evidence was not properly a part of the record before him and refused to consider it. The court also found that even if the deposi- tion were admitted “it would not affect the weight which this Court has accorded the trial testimony of the witness Knox.” We are disposed to agree with the district court’s ruling [cf. Curtis Publishing Co. v. Butts, 351 F.2d 702, 717 (Sth Cir. 1965), aff’d 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967)], since the evidence merely affected the weight to be accorded Knox’s testimony and would not have 12a changed the result in this case. The trial judge found that the admission of the deposition in evidence would not change any finding of fact. The trial judge has made this credibility determination and we have been shown no con- vincing reason to disturb it. A formidable array of evidence thus supports the district court’s finding that Crown participated in an elaborate con- spiracy among independent oil dealers to -fix the retail price of gasoline in the Baltimore area in the early 1970's. It is settled law that Under the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se. * * * United States v. Socony-Vacuum Oil Co., 310 U.S. 150, - 223, 60 S.Ct. 811, 844, 84 L.Ed. 1129 (1940). Therefore, the district court’s finding of liability on the charge of horizontal price fixing must be affirmed unless Crown can demonstrate that the finding is clearly erroneous or that Crown has a legal defense. It has done neither. Crown argues that each of the pieces of evidence support- ing the horizontal conspiracy finding is so small and un- convincing that the evidence as a whole does not amount to proof that a conspiracy existed. We are not constrained, however, to be so microscopic in our examination of the record. As the Supreme Court wrote in Continental Ore Co. v. Union Carbide, 370 U.S. 690, 699, 82 S.Ct. 1404, 1410, 8 L.Ed.2d 777 (1962) : * * * In cases such as this, plaintiffs should be given the full benefit of their proof without tightly compart- mentalizing the various factual components and wip- ing the slate clean after scrutiny of each. “... [T]he character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but 13a only by looking at it as a whole. [citation omitted.] and in a case like the one before us, the duty of the jury [and, therefore, of the trial judge in the case at bar] was to look at the whole picture and not merely at the individual figures in it.” American Tobacco Co. v. United States, 147 F.2d 93, 106 (6th Cir. 1944). Taken as a whole, the evidence presented at trial and re- viewed above affords adequate support for the conclusion that Crown participated in a horizontal price-fixing con- spiracy. Crown has pointed to a few minor points in the findings of fact (such as that Crown employees were proud of the price stability in the Maryland market) which may be slightly inaccurate. But minor flaws in the record are to be expected in a case of this size and complexity, and we hold that these errors (if errors they were) are harmless. The major findings of fact are fully supported by the record. Crown next maintains that the district court failed to consider the objective evidence Crown introduced to explain and justify its pricing policies and changes. Evidence of the pricing patterns of the major oil companies, plus evi- dence from legitimate sources of the availability of infor- mation regarding gasoline prices charged by independent companies, says Crown, disprove the existence of a con- spiracy, because the pricing policies could have arisen legiti- mately. This argument sidesteps the district court’s finding that these pricing policies did not arise legitimately; the trial judge was as free to disregard this evidence as he would have been to disregard the contrary evidence (sup- porting the conspiracy finding) which Crown now asks us to ignore. The district court did not err in failing to accord conclusive weight to Crown’s evidence of independent pric- ing justification. Finally, Crown argues briefly that the telephone calls ad- mittedly made by its officers about gasoline prices were le- - * gitimate inquiries to avoid potential Robinson-Patman Act l4a violations. Passing over the obvious rejoinder that price discrimination claims under the Robinson-Patman Act arise only when prices decrease (and these calls were often asso- ciated with price increases), it is enough to point out that only one witness at trial (Wilbur Pressler) mentioned the Act as a possible justification for the pricing calls, and he failed to keep records of the calls which would be the nat- ural object of anyone genuinely concerned over Robinson- Patman violations. The district court was justified in reject- ing this tenuous contention. III. The Vertical Price-fixing Findings In addition ‘o the horizontal agreement among the inde- pendent oil companies to stabilize retail prices, the district court also found the existence of a vertical conspiracy by means of which Crown controlled its dealers’ retail prices. Crown asserts that this finding is based on a misinterpre- tation of the evidence presented at trial, and that no vertical conspiracy existed. We note first that the district court found a “pervasive web of illegality,” and that the division of a price-fixing scheme such as that found here into “horizontal” and “ver- tical” components is, in some measure, an abstraction.? The horizontal agreement would have been worthless if Crown had not the power to control the retail prices charged by its dealers. The point of the horizontal conspiracy was to stabilize the retail price market, and an agreement with competitors to hold retail prices steady would not work without control over those prices. The existence and dura- tion of the horizontal conspiracy, then, is itself some meas- ure of proof that Crown was able to control the retail 2 The difficulties generated by this abstraction are illustrated by the parties’ semantic wrangling—and the trial judge’s partial con- fusion—over which damages are attributable to which part of the conspiracy, a problem discussed more fully below. 15a prices its dealers charged. Crown recognizes this when it argues that the vertical price-fixing must fall if the horizon- tal case is not proved. Since we have upheld the finding of horizontal price fixing, the reverse is true: the vertical price-fixing conspiracy finding is buttressed by tlie finding of the horizontal conspiracy. Turning to the substantive evidence, we find in the record ample support for the district court’s finding of vertical price fixing. The most convincing piece of hard evidence is a memorandum dated October 9, 1968, which Crown Vice President John I. Loving wrote to Crown Regional Man- ager T. H. Cahir (with copies to Garrison and Pressler). The memorandum outlined the agreement to be reached with a new independent dealer. The first paragraph of the outline read: Gross gasoline margins of 4.75¢ and 5.25¢ house brand and premium, respectively. Margins on both grades to escalate up or down 14¢ per gallon with each 1¢ on the pump (base posting = 29.9¢ and 33.9¢). This does not apply to postings increased due to a tax increase. Mini- mum margin will be 3.75¢ and 4.25¢. Above under- standing to be verbal. Pump postings at Crown’s dis- cretion. This single piece of evidence demonstrates that Crown was to control both the retail price being set and the dealer’s profit margin, which was to be keyed directly to the preset retail price. Its insistence on a verbal agreement also sug- gests some consciousness of wrongdoing on the part of Crown’s officers. Crown attempts to circumvent the devastating implica- tions of this memorandum by maintaining that the docu- ment was an internal communication which decribed Crown’s method of calculating its wholesale price from a previously determined “suggested” retail price. This argu- ment must fail, since the document by its own terms is a description of the agreement to be reached with the dealer, l6a not a guide to wholesale price calculation. Furthermore, the phrase “pump postings at Crown’s discretion” is hardly consonant with the notion of a “suggested” price; it sounds more like a fiat than a suggestion. A second highly probative piece of evidence is a clause in Crown’s standard dealer lease which provided that any dealer’s lease could be cancelled on 5-days’ notice for any reason, or for no reason at all. Short-term leases have been found to be inherently coercive devices, and when used to promote price-fixing schemes they become patently illegal. The Supreme Court wrote in Atlantic Refining Co. v. FTC, 381 U.S. 357, 368, 85 S.Ct. 1498, 1505, 14 L.Ed.2d 443 (1965), that * * * Among the sources of leverage in [the oil com- pany’s] hands are its lease and equipment loan con- tracts with their cancellation and short-term provisions. Only last Term we described the power implications of such arrangements in Simpson v. Union Oil Co., 377 U.S. 13, 84 S.Ct. 1051, 12 L.Ed.2d 98 (1964), and we need not repeat that discussion here. * * ® The inherently coercive leases found unacceptable in Simp- son were simply 1-year renewable leases with no 5-day can- cellation clause like that found here. Of course, the mere existence of the clause does not prove an antitrust violation. It must be shown that the clause was used to further an illegal scheme. An abundant show- ing was made in this case. Plaintiffs Phillips and Freitag were threatened with abrupt cancellations if they failed to comply with Crown’s “suggested” retail prices. So were Margaret Kling, David Horner, and William O’Hara, three Crown dealers who are not parties to this suit. Furthermore, all four plaintiffs, and other nonparty wit- nesses, testified to considerable pressure by Crown to in- sure compliance with Crown’s retail pricing policies. On 17a one occasion, a Crown representative actually changed the prices on Tumminello’s pumps during his absence from his station. Other testimony could be cited, but what we have discussed establishes that the trial judge permissibly found the existence of an extensive (and largely successful) ver- tical price-fixing conspiracy. Consequently, the district court’s finding of liability on the vertical price-fixing con- spiracy count is affirmed. IV. The Motor Oil Tying Agreement Crown prohibited its dealers from selling any brands of motor oil other than Crown’s own. The district court held that this prohibition was an illegal tying agreement in viola- tion of section 1 of the Sherman Act (15 U.S.C. §1). Be- cause we feel that the district court misinterpreted the emerging law of tie-ins in franchise settings, we reverse on this issue. A per se tying violation is shown when three elements exist : The fact of a tying agreement, the affecting of a “not insubstantial” amount of interstate commerce, and suffi- cient economic power in the market for the tying product for the seller to restrain competition in the market for the tied product. Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). The first of these elements is uncontested; the district court’s finding that the second existed is supported by substantial evidence and should not be disturbed. The difficulty centers on the third element—the seller’s economic power in the market for the tying product. The district court nowhere identified what it considered to be the tying product in this case. It is possible that either Crown gasoline or Crown service station leases were deemed to be the tying product. Without inquiring at length into the market for either, the court simply observed that Crown’s power to impose the tie-in was amply demonstrated 18a by the fact that it had done so, The court was probably guided by remarks in past tying cases that the oil com- pany’s plenary economic power over its dealers is inherent in the structure and economics of the petroleum distribution system. Federal Trade Commission v. Texaco, Inc., 393 U.S. 223, 226, 89 S.Ct. 429, 21 L.Ed.2d 394 (1968). But that comment, and others like it, were made in cases where the tied product was not purchased directly from the seller of the tying product. Slightly different consid- erations apply when the tying agreement is part of an otherwise valid franchise arrangement, since the very es- sence of a franchise is the purchase of several related prod- ucts in a single of several related products in a single com- petitively attractive package. A thorough discussion of the law of tying agreements in franchise settings is found in Ungar v. Dunkin’ Donuts of America, Inc., 531 F.2d 1211, 1224 (3d Cir. 1976). The Third Circuit, faced with the problem of deciding whether class action plaintiffs had to show that they were each individually coerced by the exer- cise of dominant market power, analyzed the problem in this way: * * © Under the district court’s theory a class of fran- chisees could prove a per se illegal tying arrangement by establishing: (1) that the franchisor was econom- ically dominant over its franchisees; (2) that the fran- chisor offered for sale, and sold, more than one product to its franchisees; and (3) that the franchisor had a policy to persuade franchisees to buy its products. It is difficult to conceive of a franchisor-franchisee relationship in which this could not be established. The very nature of the franchise institution contemplates the presence of a comparatively strong financial en- tity—the franchisor—that makes available to a rela- tively weaker financial entity—the franchisee—an at- tractive business opportunity at a relatively modest initial investment. * * ° 19a This analysis makes clear that it is the seller’s power in the lease market that must be examined (since no dealer could obtain or keep a Crown lease without agreeing to the tie-in) to see if the necessary economic power existed. Such an inquiry was outlined in Bogosian v. Gulf Oil Corp., 561 F.2d 434 (3d Cir. 1977), where the court observed: * * * Plaintiffs could show, for example that the de- fendants controlled a majority of existing service sta- tions and that because zoning restrictions and high cap- ital costs make development of new stations difficult, the defendants have sufficient market dominance over existing stations to impose a tie-in. [561 F.2d at 454.] No showing of this kind was made in this case. The only relevant evidence in the record is that Crown’s service sta- tions captured about 4 percent of the gasoline market in the Baltimore area. And this figure is of doubtful relevance to power in the lease market. Lacking any other evidence on this point, it is clear that plaintiff’s tying claim must fall for failure of proof. Accordingly, the motor oil tying agree- ment did not violate section 1 of the Sherman Act; the plaintiffs are not entitled to damages, and the district court’s holding on this issue is reversed. As an alternate ground for our decision, we note that even if gasoline, not the lease, is viewed as the tying prod- uct, plaintiff’s claim would still fail. In Osborn v. Sinclair Refining Co., 286 F.2d 832 (4th Cir. 1960), we held that an oil company whose share of the market was more than 10 percent had sufficient economic power to support a finding of an illegal tying agreement where the tied product was not purchased from the lessor as part of the franchise agreement, rather from a third party which paid a com- mission to the lessor. The Osborn case probably represents a showing very close to the minimum permissible, and the case before us simply does not fall within the Osborn rule either quantitatively (4 percent ar opposed to 10 percent) 20a or qualitatively (tied product produced by a seller-land- owner as opposed to third party producer). Cf. the Supreme Court’s remarks about market share in United States Steel Corp. v. Fortner Enterprises, 429 U.S. 610, 614, 97 S.Ct. 861, 51 L.Ed.2d 80 (1977). Thus, while we hold that the tying product in this case is the service station lease, the result we reach would not differ if the tying product were gasoline. V. The Refusals to Renew Crown also attacks the district court’s finding that Crown’s refusal to renew the leases of the plaintiff’s in due course constituted an unlawful refusal to deal, because the refusals were in furtherance of a price-fixing scheme which violated the antitrust laws. Crown argues that the testimony of its witnesses showed that there was a valid business pur- pose for each of the terminations, unrelated to any antitrust violations. Plaintiffs respond that the supposed “business reasons” were just fabrications, and that until they began to protest Crown’s illegal pricing policies, there had been no reason to refuse the renewal of their leases. The determination of motive, especially in a cloudy area, is a matter peculiarly within the province of the trier of fact. We conclude that the trial judge did not err in decid- ing as he did, for there was substantial evidence to support his conclusion. Plaintiffs’ past good records in the opera- tion of their stations, the extensive evidence that operators with more serious problems than the plaintiffs were never terminated, and the evasiveness on the stand of Edward T. Gillespie, Crown’s main witness on this matter, are suffi- cient to uphold the finding of the district court. *** A refusal to deal based upon a contract provision [permitting termination or nonrenewal] is, in respect to the antitrust laws, no different from the right of traders generally to select their customers. In either case, the right is limited to situations where the seller 2la has not put together an arrangement in restraint of trade. * * * Osborn v. Sinclair Refining Company, 324 F.2d 566, 575n (4th Cir. 1963). VI. The Permanent Injunction On December 15, 1975, the district court issued a manda- tory injunction which granted to each of the four plaintiffs a 3-year lease on the premises occupied by him, beginning with the date of the court’s order. The defendant was also enjoined from refusing to renew the leases at the end of the 3-year term for any retaliatory reason related to the plain- tiffs’ success in the litigation or for any other reason pro- hibited by the antitrust laws. In this appeal, defendant ar- gues that the injunction should be dissolved by this court on the ground that the plaintiffs have not demonstrated, and the district court has not found, that legal remedies were inadequate to compensate the plaintiffs for damages result- ing from antitrust violations. This court vacated the permanent injunction without prejudice when the case was first appealed, since we were unsure of the extent of Tumminello’s perjury and we were hesitant to continue in effect an injunction which might be based largely on perjured testimony. We did not suggest at the time that there was an inadequate basis for the in- junction as it then existed ; indeed, we noted that the district court had “a substantial basis, apart from Tumminello’s testimony, to support his injunction * * *.” Phillips v. Crown Central Petroleum Corp., supra, 556 F.2d at 705. We reaffirm that statement now. The district court has expressly found (opinion of October 24, 1975): * * * Crown’s proclivity for persistently disregarding the antitrust laws * * * belies any finding that a termi- nation of the leases today, or in the near future, would be based on lawful reasons. [citations omitted.] This Court finds clear evidence indicating a danger of recur- rent violations. * * * 22a The district court permissibly concluded that a permanent injunction was necessary to shield the plaintiffs from the effects of future antitrust violations by Crown. A future in- jury of uncertain date and incalculable magnitude is irrep- arable harm, and protection from such an injury is a legiti- mate end of injunctive relief. Zenith Radio Corp. v. Hazel- tine Research, Inc., 395 U.S. 100, 130, 89 S.Ct. 1562, 23 L.Ed. 129 (1969); United States v. Gypsum Co., 340 U.S. 76, 89, 71 S.Ct. 160, 95 L.Ed. 89 (1950); Advance Business Systems & Supply Co. v. SCM Corp., 415 F.2d 55 (4th Cir. 1969), cert. denied 397 U.S. 920, 90 S.Ct. 928, 25 L.Ed.2d 101 (1970). After this court’s decision of April 6, 1977, defendant’s counsel wrote to the trial judge as follows: As we construe the Fourth Circuit opinion, the Court of Appeals contemplated a hearing of the type re- quested in Crown’s motion, i. e., a hearing limited to the falsity of Tumminello’s testimony beyond the admitted perjury, submission of new proposed findings and briefs and reevaluation of the evidence in the record * °. [Emphasis supplied. ] However, on the same day defendant filed with the district court a motion for hearing on the issuance of a preliminary injunction, contending that since the permanent injunction had been vacated, it was plaintiffs’ burden to show the propriety of any new relief, and stating that in view of the developments that had occurred since the issuance of the in- junction, plaintiffs could not meet that burden. Crown agreed that the district court had the power to enter a short-term restraining order pending discovery in prepara- tion for an evidentiary hearing. On April 26, 1977, after hearing oral argument of counsel, the trial judge issued an oral opinion denying the defen- dant’s request for an evidentiary hearing and stating that 23a a preliminary injunction would be entered without preju- dice to defendant’s right to dissolve the same as to one or more of the plaintiffs. It was the district court’s interpreta- tion of our decision that the status quo should be main- tained until a decision was made on the principal question covered by this court’s remand. An order was entered on the same day, vacating the permanent injunction as to plaintiffs Phillips, Freitag and Myers. By that time, Tum- minello had been removed from his filling station because of his perjury and on the basis of the district court’s de- cision that equitable relief should not be invoked prospec- tively for his benefit. On May 12, 1977, defendant filed a motion to vacate the preliminary injunction as to plaintiffs Myers, Phillips and Freitag. Myers relinquished his station voluntarily on May 11, 1977, and the preliminary injunction was dissolved as to him by order dated June 27, 1977. As previously stated, the district court on August 19, 1977, issued its decision and opinion in which it resolved the issues regarding the effect of Tumminello’s perjury and ordered that plaintiffs Phillips and Freitag were en- titled to a permanent injunction as provided in the order of December 15, 1975. On August 29, 1977, Crown filed a motion to amend the order of August 19, 1977, and the district court responded by memorandum and order of October 13, 1977, setting forth its interpretation of our decision of April 6, 1977. The order stated that the district court had found that the perjury of Tumminello was in fact limited and that a solid factual structure remained for the issuance of the perma- nent injunction. The order further provided that if events occurring since December 15, 1975, required a modification of the relief granted, Crown should file a motion to modify or dissolve the permanent injunction on the basis of facts which were not then of record. The court’s order stated that it had invited Crown to do just that. 24a On November 15, 1977, Crown filed a motion to vacate or modify the permanent injunction which was ordered August 19, 1977, and at the time the parties filed their briefs herein, discovery was proceeding as a result of the filing of that motion. Crown did not timely appeal from the order of April 26, 1977, which reentered the preliminary injunction, but now argues that the trial judge committed reversible error in renewing the injunction without a hearing to determine whether equitable relief was still warranted. Crown con- tends that it should have been afforded an opportunity to demonstrate that the conditions had changed so much that a permanent injunction was no longer required, and that the trial judge’s order shifted the burden of proof from plaintiffs to defendant. When the term “vacated without prejudice” as used in our order is viewed in isolation, it cannot be said that Crown’s contention is frivolous or wholly without merit. However, one must carefully consider all of the court’s decision of April 6, 1977, to determine what this court intended when the injunction was vacated. The vacation “without prejudice” was a procedural device in the nature of a stay which was intended to permit the district court to determine the extent of Tumminello’s per- jury before the injunction became final. This is clear from the following portion of this court’s previous opinion: * * * It is possible that the perjury was limited, and there remains a solid structure for the injunction. * * Hence, we conclude that the District Court should have granted defendant’s motion to vacate or stay the in- junction and to conduct a hearing as prayed. Phillips v. Crown Central Petroleum Corp., supra, 556 F.2d at 705. [Emphasis supplied. ] We did not intend, after it had resolved the primary issue on remand, to require the district court to disregard all of the evidence upon which it had relied in issuing the injunc- 25a tion, nor to obligate plaintiffs to file a new application for equitable relief as though no evidence in support thereof had ever been introduced in this protracted litigation. Ad- mittedly, it would have been more appropriate and more consistent with this court’s intentior. if the order of remand had “stayed” rather than “vacated” the injunction. How- ever, on review of the whole record, we conclude that the district court properly interpreted and applied our deci- sion and order of April 6, 1977, and that the district court did not err in the reentry of the preliminary injunction in order to maintain the status quo pending resolution of the controversy arising out of Tumminello’s perjury. We hold also that after this issue was disposed of, the district court correctly decided that the record provided a solid basis for making the injunction permanent as to plaintiffs Phillips and Freitag. If as defendant asserts, conditions prevailing since De- cember 15, 1975, require a modification or dissolution of the injunction, that issue can be determined by the trial court on the basis of Crown’s pending motion to vacate or modify the injunction ordered August 19, 1977. VIII. Damages Excluding the tie-in damages, damages were assessed in favor of the four plaintiffs aggregating $431,310 after being tripled. On the basis of testimony of plaintiffs’ witness, Dr. Carl F. Christ, and exhibits prepared by him, the district court found substantial “horizontal damages” and “vertical damages.” The terms appear to be related to the horizontal and vertical conspiracies alleged, but the theories underly- ing the assessment of damages are only loosely related to the facets of the conspiratorial scheme. The “horizontal damages” assessment was based upon a finding that Crown’s wholesale prices to the plaintiffs during the conspiracy period were higher than a competitive price, while the 26a vertical damages award was premised upon the theory that Crown prevented its dealers from charging higher retail prices. We think the award of “horizontal damages” sus- tainable, but the award of “vertical damages” inconsistent and unsupportable. A. Dr. Christ reasoned, and the district court found, that the conspiratorial limitation of competition among distribu- tors enabled Crown to impose retail price requirements upon its dealers. It is true that during the period of the conspiracy there were no price wars between the retail out- lets of the conspirators, except that one of Crown’s retail outlets, Station P57 was in immediate competition with a Phillips station located at the same intersection. Phillips was not a member of the conspiracy, and, during the fiye- year period during which the conspiracy operated, the retail price of Crown gasoline at Station P57 was usually lower and never higher than Crown’s imposed retail price upon the plaintiffs." Crown gave the plaintiffs some incentive tn maintain the imposed retail prices, for the wholesale prices charged to the plaintiffs moved in a predetermined rela- tionship with their retail prices. Each increase in the retail price at the pump was divided between the dealer and Crown on a one to three basis. Thus, if there were an increase in the retail price of one cent a gallon, the dealer’s gross profit margin was increased by one-fourth of one cent while Crown’s wholesale price was increased by three-fourths of one cent. Since the higher the price the wider the dealer’s margin, each dealer had a substantial incentive to comply with Crown’s directions about retail prices, and there was no counter incentive since there was * Occasionally, Station P57 did not have the lowest Crown price in town. For convenience, however, we will consistently refer to the lowest charging station as P57. 27a general agreement that maintenance of these prices did not cause a loss of retail sales. Dr. Christ reasoned that the retail prices at Station P97 reflected the competitive price of gasoline in the Baltimore . area. Since those priceg at Station P57 were never above and usually were lower than the retail price imposed upon. the plaintiffs, Dr. Christ computed the daily differentials. Applying the three to one ratio by which retail price in- creases and decreases were shared, he computed what the wholesale price to the plaintiffs would have been if their retail prices had been the same as those charged at Station P57. Applied to the actual gallonage sold by each dealer, he arrived at a sum by which the district court found that Crown’s wholesale prices to these dealers had resulted in overcharges which could not have been exacted without the horizontal and vertical conspiracies. Dr. Christ’s “horizontal” damages represent compensa- tion to the plaintiffs from the bottom end of their margin diminution. Here there is no error in calculation, since the wholesale price calculated by Dr. Christ for Station P57 (or any other station that happened to be charging the lowest price on a particular day) is presumably the price that Crown actually charged to that station. This price is & good yardstick for determining that wholesale price Crown should have been charging to all of its dealers, and the damages plaintiffs sustained for being charged an artifi- cially high wholesale price were correctly calculated as sim- ply the difference between the actual wholesale price charged to each plaintiff and the lower price charged to another station, multiplied by the total number of gallons purchased. Crown’s other arguments attacking the horizontal award all go to the specificity of the supporting evidence and the appropriateness of the standards used by the trial judge. Crown claims, for instance, that Station P57 was in an ex- 28a ceptional, competitive situation, that Crown accorded that station special treatment, and that it is wrong to suppose that Crown could have charged P57’s “unrealistically low” wholesale price to all its dealers. We reject this contention, and others like it, because * * * a defendant whose wrongful conduct has rendered difficult the ascertainment of the precise damages suf- fered by the plaintiff, is not entitled to complain that they cannot be measured with the same exactness and precision as would otherwise be possible. * * * Eastman Co. v. Southern Photo Co., 273 U.S. 359, 379, 47 S.Ct. 400, 405, 71 L.Ed. 684 (1927). If Station P57’s wholesale price was unrealistic or aberrant, Crown has only itself to blame for not being able to point to another station whose price was more normal. The dis- trict court was entitled to use what it correctly perceived to be the best approximation of what the wholesale prices should have been. One issue concerning the horizontal damages merits fur- ther attention. In Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968), the Supreme Court held that a defendant-monopolist who increased the plaintiff’s costs could not defend by asserting the plaintiff had passed on the extra costs to its buyers. The Court thus rejected, as a general rule, assertion of a “pass- ing on” defense. This seems to us a classic pass-on case. Crown charged its retailers too much for gas; its retailers in turn, charged consumers too much for the gas it bought at artificially high prices. There are two differences be- tween this case and more common pass-on situations. First through the vertical price fix, the pass-on was “insisted upon” by the wholesaler; it was not voluntarily and unilat- erally effected by the retailer. Second, during the conspi- racy period, the retail price and wholesale price moved in a fixed relation. 29a Crown relies on Obron v. Union Camp Corp., 477 F.2d 542 (6th Cir. 1973), affirming 355 F.Supp. 902 (E.D.Mich. 1972), which permitted assertion of the pass-on defense where the scheme of distribution was “comparable to a ‘cost-plus’ contract.” Id. at 543. There the dealer bought at 5% less than the wholesaler’s list price and invariably resold at the list price. “Thus, whatever price [the whole- saler] imposed on the plaintiff, the plaintiff passed on to his customer plus 5%.” Id. This case is different. It is true that the dealers’ retail prices moved in a fixed proportion to the wholesale price. But, unlike Obron, no cost-plus arrangement insured that this immutable ratio would apply even in the absence of a conspiracy. Indeed, a free market surely would and did disrupt it. See Pl. Ex. 69, Table D (in- dicating that wholesale and retail prices did not move in a fixed relation in the post-conspiracy period). Thus we can- not say with certainty that the wholesale overcharges did not injure the Crown dealers. We know that absent a con- spiracy Crown’s wholesale prices would have been lower. We do not know what the dealers would have charged at retail. If, in fact, a conspiracy-imposed increase in retail prices did not significantly reduce sales, it would not have been surprising if the dealers had “found” those advan- tageous prices in a free market. Thus Crown’s pass-on argu- ment runs afoul of the specific teaching of Hanover Shoe: “Byven if it could be shown that the buyer raised his price in response to, and in the amount of, the overcharge and that his margin of profit and total sales had not declined, there would remain the nearly insuperable difficult of dem- onstrating that the particular plaintiff could not or would not have raised his prices absent the overcharge or main- tained the higher price had the overcharge been discon- tinued. ... [E]stablishing the applicability of the passing- on defense would require a convincing showing of each of these virtually unascertainable figures.” Hanover Shoe, Inc. 30a v. United Shoe Mach. Corp., 392 U.S. 481, 493, 88 S.Ct. 2224, 2231, 20 L.Ed.2d 1231 (1968).* B. Dr. Christ undertook to compute what he called “vertical damages” by examining the dealers’ gross profit margins on a daily basis during the post-conspiracy period begin- ning April 3, 1973 and ending August 24, 1973. He compared these with the “theoretical” gross profit margins which, he says, would have prevailed if the conspiracy had remained in operation during that period of almost five months. He assumed that, if the conspiracy had continued until August 24, 1973, the wholesale prices charges would have been . There is another reason for not applying the cost-plus contract exception. In Hanover Shoe, the court recognized that the pass-on defense might sometimes apply ‘‘—for instance, when an over- charged buyer has a pre-existing ‘cost-plus’ contract.’’ 392 U.S at 494, 88 S.Ct. at 2232. After Hanover Shoe, some courts opted for a broad reading of this directive, applying the cost-plus con- tract exception to similar arrangements. See Obron, supra; State of Vest Virginia v. Chas. Pfizer & Co., 440 F.2d 1079 (1971). In Illinois Brick Co. v. Illinois, 431 U.S, 720, 97 S.Ct. 2601. 52 L.Ed 2d 707 (1977 ), however, the Court seemingly read Hanover Shoe as extending the exception only to rare situations in which the middleman had a pre-existing cost-plus contract with his buyer defining the amount to be purchased. ‘‘In such a situation the purchaser is insulated from any decrease in its sales as a result of attempting to pass-on the overcharge, because its customer is committed to buying a fixed quantity regardless of price. The effect of the overcharge is essentially determined in advance, without reference to the interaction of supply and deimand.”’ Id. at 736 97 S.Ct. at 2070. In light of this restrictive rationale the cost-plus exception ought not to be applied here. See Mid-West Paper Prods ae igre Group, Inc., 596 F.2d 573 (8d Cir., 1979). ere, 0 viously the Crown dealers had no -existi contracts with motorists. Indeed, there was “sae The ‘‘cost-plus’’ arrangement arose solely out of Crown’s price- fixing policies. No dealer was ‘‘i > . insulated from any d in i sales’? when Crown raised retail prices. sis tat 3la those actually charged during the period beginning April 3, 1973. He then computed a theoretical retail price on the - basis of the relationship between wholesale and retail prices during the conspiracy period.’ He found that the dealer’s actual gross profit margins during the post-conspiracy pe- riod were slightly higher than what they would have been if his assumptions about prices were valid. This difference he converted to a post-conspiracy per-gallon gain which he then applied as a multiplier to all of the gallonage sold during the five-year conspiracy period. The computation is seriously flawed. There is no basis for an assumption that wholesale prices during the post- conspiracy period were exactly what they would have been if the conspiracy had continued in effect. The district court found that the operation of the conspiracy resulted in higher wholesale prices than would have prevailed without the conspiracy. The court based a very substantial damage award upon the basis of the finding that the wholesale charges were excessive. There is no reason to suppose that, after removal of the leverage provided by the horizontal conspiracy, Crown maintained the economic power to main- tain its wholesale prices at levels above competitive prices. Actual price figures establish that in the post-conspiracy period wholesale prices did not move with retail prices. The explanation which most readily suggests itself is that Crown no longer possessed the power to exact excessive charges to the extent that it had during the period of the censpiracy. Moreover, while the testimony showed that during the conspiracy period wholesale and retail prices moved in a predetermined relationship, the control was the retail price, not the wholesale price. On the three-to-one basis, if retail ’ Christ did not explain what he did in this way. He simply identified ‘‘theoretical margins’’ at the various actual wholesale prices. Of course, one can compute the hypothetical retail price by simply adding the actual wholesale price to the theoretical margin. In effect, this is all Christ did. 32a prices moved up or down, the wholesale prices were ad- justed. There is nothing in the record to suggest that inde- pendent movement of wholesale prices would have been similarly reflected in a movement of retail prices. Thus, Christ’s attempt to hypothesize retail prices based on wholesale price movements is without foundation. The most serious flaw in the use of the computation, how- ever, was the demonstrable falsity in its assumption that the conspiracy had exerted a general depressing effect upon retail prices during the five-year period of the conspiracy. Clearly, this was Christ’s assumption, for in five months’ worth of post-conspiracy margin comparisons, there is not a single instance in which an hypothesized retail price ex- ceeded the actual retail price. The whole thrust of the plaintiffs’ proof and the district court’s findings was that Crown’s price fixing kept retail prices up. Dr. Christ testified that the price fixing raised the retail price level, and the district court found that he had convincingly shown that without Crown’s illegal restraints the retail price for gasoline would have been lower. Indeed, this was the basic premise upon which horizontal damages were awarded, since it was assumed that, without the con- spiracy, retail prices charged by these plaintiffs would have been comparable to those charged by Station P57. The lowest price was posited to be a competitive retail price. Horizontal damages were awarded as a direct function of the extent to which the plaintiffs’ prices exceeded the lower price. Nctably, the plaintiffs’ prices were never lower. Crown is one of the minor distributors of gasoline. Its retail outlets, as those of other minor distributors, attract customers from the retail outlets of the major distributors by offering gasoline at somewhat lower prices. Before the conspiracy period, however, competition between the minors had resulted in price wars during which the differential between prices charged by the majors and the minors would 33a widen to the point that the major distributors would put into effect retaliatory price cuts, thus lowering the ceiling to which the prices charged by dealers for the products of the minors could rise. The whole purpose of the conspiracy was to put an end to that kind of competitive effect. As long as the conspiracy was in operation, the endeavor of the conspirators was to maintain retail prices for their products at a level sufficiently below the retail price of the products of the major distributors to attract customers, but not so low as to affect the retail pricing of the products of the major distributors. Thus, the whole purpose of the con- spiracy was to maintain retail prices above competitve levels. The district court did find that on two occasions Crown vetoed retail price increases proposed by its dealers. If they suffered losses on that account, it is possible that they might be recoverable, but clearly the effects of these occur- rences were transitory. Clearly, Christ has not attempted to measure any transitory effect of the restraints that Crown placed upon retail price increases, for he applied the multi- plier to all of the gallons of gasoline sold throughout the entire period of the conspiracy, including gallons sold at inflated prices. Oddly, he did not seem to recognize that he was contradicting himself and the basis upon which horizon- tal damages were sought. Clearly, comparisons of the dealers’ actual gross profit margins during the post-conspiracy period with an entirely theoretical profit margin based upon competitive wholesale prices cannot be used to compensate any possible loss of sales during the conspiracy period. Dr. Christ himself testi- fied that the actual gallonage sold was a reasonable approx- imation of what would have been sold in the absence of a conspiracy. If any such loss of sales because of the mainte- nance of higher retail prices had been suspected, it surely could not be measured by any data extrapolated from the post-conspiracy experience. Nor can damages be awarded 34a on the basis of any such data with its essential inference that during the conspiracy period there had been a general depression, rather than a general inflation, of retail prices. The wholly inconsistent awards of horizontal and vertical damages under these circumstances cannot stand. IX. Attorneys’ Fees There was an award of $200,000 as attorneys’ fees for the plaintiffs. The amount of the damage award in the dis- trict court was a highly relevant consideration in fixing the amount of the attorneys’ fees. Since we have determined that plaintiffs are not entitled to recover any part of the damages awarded to them by the district court as “Vertical Damages” and “Motor Oil Damages,” this reduction in the damage award requires that there be an appropriate re- duction in the amount allowed for attorneys’ fees. Appro- priate for consideration, too, is the fact that plaintiffs, their lawyers, and their expert, Dr. Christ, complicated the com- putation of damages by confusing injections of inconsistent premises and assumptions. The district court is, therefore, directed to make redetermination of the amount that should be awarded as attorneys’ fees on the basis of these addi- tional considerations. X. Conclusion The judgment is affirmed in part and reversed in part and the case remanded for further proceedings consistent with this opinion. Winener, Circuit Judge, concurring and dissenting : While I concur with the substantive holdings of the panel in this complicated case, I respectfully dissent on the issue of whether the district court properly conducted the remand hearing. I simply do not feel that the trial court complied with our remand order requiring “a full hearing” to deter- 35a mine the true extent of Tumminello’s perjury, and an “ex- amination thereafter of the findings, conclusions, and in- junction.” 556 F.2d 702, 705 (4th Cir. 1977). On remand, the district court heard Tumminello testify as to the extent of his perjury, and held that the remainder of his testimony should be credited. In so doing, the district court credited Tumminello’s testimony over the testimony of several Crown officials, including James C. Blackman, who had testified only by deposition at the trial. The de- fendant requested, among other things, that Blackman be allowed to testify in person at the remand hearing, but the district court denied this request. I believe the denial of this request was error. The court credited an admitted per- jurer who admitted to the manufacture of false evidence in this very case over a Crown witness without ever viewing the demeanor of the latter. Of course, issues of credibility are often peculiarly within the province of the trier of fact and normally are within the scope of only limited appellate review. However, this rule has as its principal rational foundation the opportunity of the trier of fact to view the live testimony of both witnesses and then credit one over the other. It is the opportunity to hear the witness testify and observe his manner and demeanor on he stand which places the district court in a better position to judge credi- bility than that of an appellate court which must rely on a cold paper record. In the case at bar, the district court credited live testi- mony over evidence taken by deposition, but the live testi- mony was from a witness whose admitted perjury with re- spect to certain parts of his testimony was the reason the case was remanded in the first place. I believe the district court was obliged to hear the live testimony of Blackman before making a credibility determination. It may be that after so doing the district court would yet have credited Tumminello, or it may be that even if Tumminello’s testi- mony had not been credited the other evidence in the case 36a might support a plaintiff’s judgment. But the district court did not in terms base its holding on the sufficiency of evi- dence other than Tumminello’s to support its finding, and, since it refused to hear Blackman, I would remand the case once again, this time for a new trial, and would give the defendant the opportunity to request trial by jury were it so advised. 37a APPENDIX B Unitep States Court or APPEALS For THE FourtH Circuit No. 77-1780 No. 78-1078 Joun T. Puruips, Jr., Corrapo Frank TuMMINELLO, Cares Puiu FReirac AND CARROLL CHARLES MyYERs, Plaintiff s-A ppellees, versv'3 Crown CENTRAL PETROLEUM CoRPORATION, Defendant-A ppellant. Order Filed August 27, 1979 Upon consideration of the petition for rehearing and the suggestion of rehearing en banc, and there having been no request for a poll of the court on the suggestion of rehearing en banc, Ir Is Now Onverep that the petition for rehearing be, and it hereby is, denied, With the concurrence of Judge Cowen. Judge Widener would grant rehearing. /s/ Cusment F’, Haynsworts, JR. Chief Judge, Fourth Circuit August 24, 1979 38a APPENDIX C Unirep States District Court, D. Marytanp Civ. Nos. 73-303-H, 73-304-H, 73-504-H and 73-506-H. Joun T. Puriups, Jr., Plaintiff, v. Crown CentTraL PETROLEUM Corporation, Defendant. Corrapo Frank TuMMINELLO, Plaintiff, We Crown Centra, PetroLEuM Corporation, Defendant. Cuartes Purtup Frerraa, Plaintiff, v. Crown Cen TRAL PeTRoLEuM Corporation, Defendant. CARROLL CHARLES Myers, Plaintiff, v. Crown Centrat PetroLeum Corporation, Defendant. May 20, 1975. ALEXANDER Harvey, II, District Judge: These consolidated cases involve various antitrust claims asserted by four independent gasoline service station deal- ers against their supplier-landlord. Each of the four plain- tiffs operates in the Baltimore metropolitan area a filling station leased from his supplier, defendant Crown Central Petroleum Corporation (hereinafter ‘*Crown’’). Each has filed a separate action in this Court seeking treble dam- ages, attorney’s fees, costs and injunctive relief under 39a Section 1 of the Sherman Act and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§1, 15 and 26.’ In language that is almost identical, the four complaints allege an illegal horizontal conspiracy between Crown and its competitors, an illegal vertical agreement between Crown and each plaintiff and an illegal tying agreement between Crown and each plaintiff. Specifically, it is alleged (1) that in recent years Crown has unlawfully combined and conspired with certain competitors to raise, fix, stabilize and maintain wholesale and retail gasoline prices in the Baltimore metropolitan area; (2) that since plaintiffs have been lessees of their stations, Crown has unlawfully fixed and determined the retail prices for the sale by plaintiffs of gas and oil; (3) that Crown has unlawfully required plaintiffs to purchase motor oils from it; and (4) that Crown has unlawfully restricted plaintiffs as to types of other products sold at their stations through vending ma- chines or otherwise and as to the sources from which such other products could be purchased. After each suit was filed, Crown notified each plaintiff that his lease would not be renewed.’ Plaintiffs thereupon filed a combined motion for a preliminary injunction under § 16 of the Clayton Act, 15 U.S.C. §26, seeking to enjoin Crown from terminating or not renewing their leases, pending the final determination of these actions. Follow- ing extensive discovery, a hearing was held on such motion, and this Court ruled that a preliminary injunction should be entered to prevent irreparable harm to plaintiffs and 1 Represented by the same attorneys, two of the plaintiffs filed suit in April 1973, and the other two filed suit in May 1973. All four cases were consolidated for all purposes, including trial, pur- suant to Rule 42(a), F.R.Civ.P. ' 2 Ag noted hereinafter, a new lease was tendered to plaintiff Myers and actually signed by him, subject to certain conditions. Crown refused to accept such conditions, and Myers’ lease, like the others, was not renewed. 40a to maintain the status quo during the pendency of this litigation. Phillips v. Crown Central Petroleum Corpora- tion, 376 F.Supp. 1250 (D.Md.1973). Under the terms of this Court’s preliminary injunction of September 20, 1973, plaintiffs have continued to operate their service stations subject to the provisions of Crown’s current Lease and Dealer Agreement, under which all of Crown’s dealers in Maryland now operate their stations. | Many of the background facts involved in this litigation are set forth in this Court’s previous Opinion, which is reported at 376 F.Supp. 1250-1258. However, the only issue involved there was plaintiffs’ right to a preliminary in- junction and the only claims considered were that plaintiffs were not being renewed because they had refused to comply with illegal directives from Crown to fix their retail prices of gas and oil and because they had insisted on their right to sell products other than those designated by Crown. Because of the urgent necessity that plaintiffs’ right to continue as dealers during the pendency of the litigation be determined at the earliest possible date, the motion was decided without an evidentiary hearing and on the affidavits, exhibits and deposition filed by the parties. In its Opinion, this Court noted that there were numerous conflicts between affidavits submitted by the plaintiffs and those filed on behalf of Crown. 376 F.Supp. at 1254. Find- ings were made on the basis of the record then before the Court, and the right was reserved to the parties to relitigate fully at trial all the factual issues. As a result of such findings, this Court concluded that plaintiffs at trial would probably be able to establish that their leases were not renewed because they had objected to illegal coercive pres- sures brought by defendant against each of them. 376 F. Supp. at 1256. Following extensive additional discovery and pre-trial proceedings, these consolidated cases were tried by this 4la Court sitting without a jury.* With the agreement of the parties, the Court ordered a bifurcated trial, with all issues of liability being tried first and all issues of remedy Te- served for a later trial if this Court were to find liability. The trial lasted some four weeks. The numerous wit- nesses included, of course, the plaintiffs themselves and various officers and representatives of Crown. The testi- mony was sharply conflicting as to most factual issues. Proposed findings of fact were filed by the parties before the trial and supplementary proposed findings after the trial. In making the detailed findings of fact set forth hereinafter, this Court has generally credited the testimony of the plaintiffs and the witnesses called on their behalf and has therefore accepted many more of plaintiffs’ pro- posed findings than defendant’s.* The accounts given by the plaintiffs of their dealings with Crown are corroborated by other evidence in the case and in particular by the testi- mony of witnesses who had no particular stake in the out- come of this litigation.» Throughout the lengthy trial, various non-party witnesses called by plaintiffs generally gave a description of Crown’s operating methods and rela- tions with its dealers and competitors which was similar to that given by the plaintiffs in their testimony. ’ Plaintiffs had originally requested a jury but thereafter waived their right to a jury trial. *Some proposed findings of both plaintiffs and defendant were rejected by the Court because they were not supported by the credible evidence. Others were not accepted because they were not pertinent to a resolution of the legal issues presented or because they were duplicative of other findings. 5 Included among these were the witnesses Knox, O’Hara, Kling, Horner and Mech. 42a ISSUES It is agreed that the following iss ues are the Court in this case: ‘i pees i 1. Did Crown violate the er'’.ust laws b ing i horizontal price-fixing? y engaging in 2. Did Crown violate the antitrust 1 ing i aws b vertical price-fixing? eet becncsn sea 3. Did Crown violate the antitrust laws by imposing unreasonable restraints on the plaintiffs as to their free- dom to purchase and sell motor oils, antifreeze vending machine items and other products? 4. If the antitrust laws were violated in one or more of these respects, did such violation cause Crown not to renew the leases of plaintiffs or did the plaintiffs suffer other injury as a result of such violation? FINDINGS OF FACT (a) General Findings 3. Crown Central Petroleum Corporation is a Maryland corporation with its principal office in Baltimore Mary- land. Crown operates a refinery located in Houston Texas and markets gasoline through service stations trading under the Crown name located in fourteen Eastern and Gulf Coast states. In 1972 and 1973, Crown’s gross reve- nues were $183 million and $213 million respectively, while net profits after taxes were $1.3 million and $8.4 million respectively. For the six months ended June 30 1974 revenues increased 2.2 fold, year to year. : 2. Crown is generally referred to in the etrol i dustry as an ‘‘independent”’ gasoline aneanie as bay oil companies, including Ashland Oil Company, Hess Oil Company, Petroleum Marketing Corporation (PMC) Meadville Corporation and Hudson Oil Company. PMC 43a operates the ‘‘Scot’’ stations and Meadville operates the ‘‘Saveway”’ stations. Gasoline sold at service stations sup- plied by the independents is generally sold at prices lower than the prices charged at service stations supplied by the ‘‘Major’’ oil companies, including Exxon, American Oil, Gulf and Citgo. 3. In 1968, Crown altered its method of marketing gaso- line in the Maryland market. At this time, Crown began to sell its gasoline through the so-called ‘‘multipump’’ mar- keting concept. This involved the sale of gasoline and motor oil at discount prices in modern, well-lighted, clean and uncluttered service stations featuring fast, efficient service by neatly-groomed attendants. Before 1968, Crown had it- self owned and operated its service stations in the Balti- more area. In changing its method of operation, Crown felt that an independent dealer would be better able than a company employee to maintain supervisory control over the station’s attendants and facility and that this would serve to enhance Crown’s image of clean appearance and fast service. Through its multipump outlets, Crown has continually increased its share of the Maryland gasoline market. In 1968, Crown’s total sales of gasoline in Mary- land amounted to less than 2% of the market. For the year 1972, it had raised its share to 4%. 4. By 1973, in the Maryland market, Crown was the largest of the independent gasoline marketers and its 5% share of gallonage sales was the fifth largest market share of all gasoline marketers, including the ‘‘major’’ oil com- panies. By that date, it was surpassed, insofar as its share of the market was concerned, only by Exxon, American Oil, Shell and Gulf. 5. The independent dealers would lease their stations from Crown, purchase petroleum products from Crown and hire and maintain their own attendants. 44a 6. Hach Crown dealer would execute a lease, a dealer contract and an Equipment Loan Agreement. Prior to 1973, each of these instruments was for terms of one year and renewed itself for successive one-year terms, if not termi- mated. The contracts and leases were cancellable on five days’ notice. 7. Since July 1, 1973, when the Maryland Gasoline Prod- uct Marketing Act went into effect, Crown and its dealers, other than plaintiffs, have entered into new contracts with terms ranging up to three years. 8. Crown has found that its dealers have, for the most part, maintained clean, attractive stations and provided fast, efficient service. Sales at Crown’s multipump stations have continued to grow under dealer operation, with the result that Crown’s sales, profits and share of the Mary- land market have increased. At the same time, such opera- tion of multipump stations has proved to be profitable for the dealers. 9. Each plaintiff is an independent Crown service station dealer and has operated his Crown service station pursuant to leases and contracts with Crown. Plaintiff Phillips op- erated a Crown service station located at Garrison and Wabash Avenues in Baltimore City during the period De- cember 21, 1970 until January 1971. Since January 25 1971, Phillips has operated the Crown service station le: cated at Ritchie Highway and Old Annapolis Road. Plain- tiff Tumminello has operated the Crown service station lo- cated at 5838 Belair Road since March 1969. During the period 1964 until March 1969, Tumminello was employed by Crown first as a Sales Representative and then as a Sales Supervisor. Plaintiff Freitag has operated the Crown service station located at Harford Road and Northern Parkway since November 25, 1970. Plaintiff Myers has operated the Crown service station located at Quarterfield and Old Stage Roads since August 18, 1970. 45a 10. Each plaintiff originally operated under a renewable one-year lease and contract. Plaintiff Phillips was offered and accepted a six-month lease and contract in December 1972. He filed his suit in this Court on April 3, 1973. He was notified on May 11, 1973 that his lease and contract would be allowed to expire. Plaintiff Tumminello was of- fered and accepted a six-month lease and contract in Feb- ruary 1973. He filed his suit in this Court*on April 3, 1973. He was notified on May 11, 1973 that his lease and contract would be allowed to expire. Plaintiff Freitag filed his suit in this Court on May 18, 1973. By letter dated August 2, 1973, Freitag was notified by Crown that it would not enter into a new lease and contract with him upon the expiration of his present lease and contract on November 25, 1973. The lease and contract of plaintiff Myers were successively renewed for one-year terms in August 1971 and August 1972. 11. After he filed suit on May 18, 1973, plaintiff Myers was offered a Branded Service Station Lease and Dealer Agreement by Crown of the type under which all present Maryland Crown dealers now operate. Myers executed the Lease and returned it to Crown. However, because he believed certain provisions of the lease were illegal, he reserved the right to challenge in this suit the legality of the new lease. For this reason, Crown refused to accept the Lease and Agreement which had been signed by Myers. 12. During the time that plaintiffs have operated their Crown service stations, each plaintiff has devoted sub- stantial efforts and has invested substantial amounts of time and money to promote the sale of gasoline, motor oils and other products at his station. As a result of the efforts of each plaintiff, each has substantially improved the gal- lonage sales at his service station. Plaintiffs Tumminello and Freitag have received awards and commendations for the attractive appearance of their stations. Gasoline sales at both Freitag’s and Phillips’ service stations have been 46a above the average of all Crown dealers in the Baltimore market, and Tumminello’s sales have been only slightly below those of the average Crown dealer. Myers’ sales have also been satisfactory. 13. Plaintiffs’ satisfactory performance as Crown service station dealers has previously been recognized by Crown. (b) Findings Concerning H orizontal Price-Fiaing ‘14. Beginning at least as ealry as 1968, Crown has com- bined with competing independent suppliers, including, among others, PMC, Hess, Ashland and Meadville, to arti- ficially maintain retail gasoline prices in the Baltimore metropolitan area. Crown has conspired with the above- named suppliers, among others, in the Baltimore metro- politan area, both to eliminate retail price disturbances which threatened to become major price wars, and to initi- ate joint retail price increases. 15. On the morning of January 26, 1972, Crown District Manager Jack Conway and Crown Sales Representative Michael Corbett visited Crown dealer John Gibson at his service station located at 2650 Patapsco Avenue and dis- cussed with him low retail prices charged by a competing Scot station operated by PMC located at Patapsco Avenue and Potee Street. Conway made a long distance telephone call from Gibson’s service statinn and dialed 202-223-5440 the telephone number of PMC. Conway identified to PMC Retail Sales Manager and Vice President Henry Wain. wright the competing Scot service station and complained that it was posting a low retail price. Later that same day PMC increased the retail price charged at the Scot service station which was then competing with Gibson’s Crown station. On other occasions, Conway contacted a repre- sentative of PMC for the purpose of effecting joint retail price increases. 16. Similarly, PMC initiated telephone communications with Crown in order to effectuate joint retail price in- ’ 47a creases at competing Crown and PMC supplied Scot service stations. Joseph Gilboy, Crown District Manager, received repeated requests from representatives of PMC, including Wainwright, to increase vetail prices charged at Crown service stations. 17. On various occasions, Gilboy received telephone calls from representatives of PMC informing him that PMC was going to institute retail gasoline price changes at par- ticular Scot stations. On these occasions, Gilboy was given advance notice of future retail price moves by Scot stations, before these price changes were made known to the public. 18. Since 1970, Wilbur G. Pressler, Crown’s Manager of Administration, Marketing Department, has repeatedly communicated by telephone with represcntatives of other independent suppliers, including Irving Grossman of Hess, Joe Davis of Ashland and Joseph Jerome of Meadville, in order to eliminate retail price disturbances within the Baltimore market. Pressler repeatedly telephoned Irving Grossman, who handled the pricing for Hess in Baltimore, to complain about Hess branded service stations which posted lower retail prices in the Baltimore metropolitan area than competing Crown stations. On one occasion, when Grossman attempted to justify a low retail price charged by a Hess service station located on Ritchie High- way by identifying a competing Peco independent service station which was also charging the same price, Pressler told Grossman that the actions of the Peco service station did not justify Hess’ low retail price and that Grossman was really reaching out for a reason for a lower price. In the Patapsco Avenue area, a Crown station competed with stations of Midway, Hess and Ashland. Retail prices had been stabilized in that area shortly before January 1973, when the price structure was endangered by a double ‘stamp promotion at the Saveway service station. The Ash- land-supplied Bi-Lo service station in the area retaliated by lowering its retail price. Other independent gasoline 48a marketers, including Crown and Hess, were well aware of the importance of ending the price war on Patapsco Ave- nue. They feared that major oil companies which supplied Stations located in the Patapsco Avenue area would react to the price disturbance by instituting voluntary allow- ances to their service stations which were losing volume to the discounting independents. If the major oil companies granted such voluntary allowances, such allowances would be in effect over a much larger portion of the Baltimore area and would depress retail prices charged at inde- pendent service stations throughout the broad geographic area of the Baltimore market. Crown Vice President Jack Loving instructed Wilbur Pressler, Crown’s Manager of Administration, Marketing Department, to telephone Ash- land’s Vice President Joe Davis, to complain that the Bi-Lo service station was charging low retail prices and thereby threatening the stabilization of retail prices in the Patapsco area, Davis told Pressler that the price reduction at the Bi-Lo station was occasioned by Saveway’s glasses or stamp promotion at its Patapsco Avenue station. Pressler also related Crown’s complaint concerning Saveway’s pro- motion to Joseph Jerome, Vice President of Meadville by telephoning Jerome at his office in New J ersey. Pressler told Jerome that he had just spoken with Ashland and further informed him of Ashland’s claim that Saveway had precipitated the price disturbance by its promotion at its Patapsco Avenue service station. Pressler felt that a continuation of the price cutting would hurt the entire market, and his intent in making these calls was to eliminate the price competi [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1307%3A1. Public record. Not legal advice.