# Petition — Edward J. Sweeney & Sons, Inc. v. Texaco, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1401%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1981 - **Citation:** 451 U.S. 911 ## Text iN THE a Supreme Court of the United States TERM, 1981 No. EDWARD J. SWEENEY & SONS, INC., MISSION GAS OIL COMPANY, INC. AND PETROLEUM PRODUCTS CO., Petitioners VS. TEXACO, INC. Respondent PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT MITCHELL A. KRAMER STEVEN KAPUSTIN ALICE G. BURT KRAMER AND SALUS 1520 Locust Street Seventh Floor Philadelphia, PA 19102 (215) 545-7700 Attorneys for Petitioners, EDWARD J. SWEENEY & SONS, INC. MIssION GAS OIL COMPANY, INC. AND PETROLEUM PRODUCTS CoO. The Winchell Company—Phila., Pa. 19107—(215) 568-1770 QUESTIONS PRESENTED 1. Do the lower courts’ requirements that to withstand a motion for directed verdict, an antitrust plaintiff must show direct evidence of the causal nexus between competitors’ com- plaints to a supplier about a discounter’s marketing behavior and the supplier’s actions in response thereto impose an improper restriction on the quantum and character of the evidence needed to bring an action within the scope of Section 1 of the Sherman Act? 2. Was it proper for the Third Circuit to affirm the lower court’s direction of the verdict when the ruling was the result of the lower court’s weighing the evidence and determining the credibility of witnesses? 3. When a seller charges different prices, based on an ad- mitted phantom event, to competing purchasers who perform identical marketing functions, is there evidence of price dis- crimination violative of § 2(a) of the Robinson Patman Act sufficient to withstand the denial, on the merits, of injunctive relief? In reviewing this question was it unconstitutional for the Third Circuit to apply a different standard to large purchasers than to small purchasers? 4. Where there is proof of direct damage to a disfavored purchaser who absorbed the increased costs as a result of price discrimination violative of § 2(a) of the Robinson Patman Act, should the case be submitted to the jury to determine the amount of damages? 5. Does summary judgment against indirect purchasers who purchase on a cost-plus basis contradict the recognized ex- ception to the indirect purchaser doctrine in Illinois Brick? TABLE OF CONTENTS PAGE CY x 66056 FO 4s 6H 08 o ONO RON EE EN 1 PE. Vives ate owes ew ems eW6e sae hea ReE EE 2 OEY PROCMIOMS TNVORVER 2... wis ccccesvcedeues 2 Ss Mie WO GD ok 6 kn bs ow 60 eccen tees wane eee 3 peenons for Granting the WIit .... ...cccccvenccsvees 7 I. Viewing all the evidence presented, the circum- stantial evidence presented was sufficient to show conspiracy in violation of § 1 of the Sherman Act and to submit the case to the jury ............. 7 II. Denial of injunctive relief on a § 2(a) Robinson- Patman Act claim was improper where a seller charges different prices, based upon an admitted phantom event, to competing purchasers who per- Pee BROUGHT TOMCTIOME ous oc ete nes ce vacdours 18 III. Where there is proof of direct damage to a dis- favored purchaser as a result of a § 2(a) Robinson- Patman Act violation, the jury should be permitted to determine the amount of damages .......... 22 IV. Summary judgment against indirect purchasers who purchase on a cost-basis contradicts this Court’s de- cision in Illinois Brick ......... 0... cece ee nee 27 Appendix A (Opinion and Judgment of the CURE CE ABUOGE) once vec ci center a weseins 31 Appendix B (Opinion and Judgment of the Federal District Court) ............ 0. eee eeee 78 Appendix C (Judgment of Court of of Appeals, | Ter errr Tr ererreerrre re eer 161 Appendix D (Order of the Federal District Court, Gated Fene 1, 19TS) once cncvccscccsccserenaws 162 Appendix E (Complete Text of Statutes Involved) ...... 163 ii TABLE OF CITATIONS Cases: PAGE Alloy International Co. v. Hoover-NSK Bearing Co., 1980- 1 Trade Cases 4 63,148 (7th Cir. 1980) ....... 15, 16 American Tobacco Co. v. United States, 328 U.S. 781 Be eR ee eee Oe re ee Eee erie ee _ ee 9 Beech Cinema, Inc. v. Twentieth Century-Fox Film Corp., eee ee RL Be. Se |) i i6 Bruce's Juices, Inc. v. American Can Company, 330 U.S. to ge ERR, a a ae oe 24 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 USS. WET) COPE Vas SRA ER EEO SCR ee ae yn Carbon Steel Products Corp. v. Alan Wood Steel, Co., 289 F.Supp. 364 (S.D.N.Y. 1968) ........00ccaes 10, 11 Carr Electronics Corp. v. Sony Corp. of America, 472 pam, SCPE COL. ISTP) cc ccc tvcccave 10, 13 Cernuto, Inc. v. United Cabinet Corp., 595 F.2d 164 Ce ae, UE os ean ate ¥Gas odd eRe bake 14-16 Chrysler Credit Corp. v. J. Truett Payne, Inc., 607 F.2d 1133 (Sth Cir. 1979), cert. granted, 101 S.Ct. 70 i) area ye ern ay ere eee a enaee 23 Continental Ore Co. v. Union Carbide & Carbon Corp., DE Wok We CPE oe eg Oo a es on a eee wns 8.9 Corn Products Refining Co. v. FTC, 324 U.S. 726 (1945) 19, 20 CUSCO v. Certain-teed Products Corp., 1981 Trade Cases Der eW A Tee Gey BORED 6 cee kan wees nh exo Was 16 Dantzler v. Dictograph Products, Inc., 309 F.2d 326 (4th Cir. 1962), cert. denied, 372 U.S. 970 (1963) .... 23 Eastern States Retail Lumber Dealers’ Association v. United erated, £94 WU. GOO CUGIB) oiccik i vse cs ce wes 9,10 iii TABLE OF CITATIONS —~(Continued) Cases: PAGE Elizabeth Arden Sales Corporation v. Gus Blass, Co., 150 ieee Oe Cee BUDE Svcs chores eb sys sees 23, 24 Enterprise Industries, Inc. v. Texas Co., 240 F.2d 457 (2d Cir.), cert. denied, 353 U.S. 965 (1957) ... 23, 24 FLM Collision Parts, Inc. v. Ford Motor Co., 543 F.2d 1019 (2d Cir. 1976), cert. denied, 429 U.S. 1097 PP nk Che nes Pr se ee rei ee Sar oN 19, 20 FTC vy. Beech-Nut Packing Co., 257 U.S. 441 (1922) ... 9 FTC v. Cement Institute, 333 U.S. 683 (1948) ........ 20 FTC v. Morton Salt Co., 334 U.S. 37 (1948) ....... 19-21 FTC v. Staley Mfg. Co., 324 U.S. 746 (1945) ......... 20 Freedman v. Philadelphia Terminals Auction Company, 197 F.Supp. 849 (E.D. Pa. 1961), aff'd, 301 F.2d 830 (3d Cir.), cert. denied, 371 U.S. 829 (1962) .. 23 Girardi v. Gates Rubber Co. Sales Div., Inc., 325 F.2d 196 De hee as a ae eo 12-13 Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 ee ee. CE a ra hd bn he eee beeen eho 27, 28 Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) .... 27-29 Interstate Circuit, Inc. v. United States, 306 U.S. 208 2), Pee err ee re er errr Tere ee 9,10, 17 Klein v. American Luggage Works, Inc., 323 F.2d 787 | RR ee eee ee ee 10, 11 Loew’s, Inc. v. Cinema Amusements, 210 F.2d 86 (10th = Le eee re eee re eer rare 13 Maple Flooring Mfrs.’ Ass'n. v. United States, 268 U.S. 563 ee Ac Cah se vies et eee ee a eae heat 13 Mid-West Paper Products Co. v. Continental Group, 596 ge Bye ea Bs a.) 5 ereenare crcoran (nena aa 27 TABLE OF CITATIONS—{Continued) Cases: PAGE Norfolk Monument Co. v. Woodlawn Memorial Gardens, Bk. CRE Fee RD bs o'sinicase deatacouwnenes 14 Perkins v. Standard Oil Co., 395 U.S. 642 (1969) ..... 24 Poller v. Columbia Broadcasting System, Inc., 368 U.S. De SER os aca eca beeen ee eeeeaas Uaeues 14 Tennant v. Peoria & P.U.Ry. Co., 321 U.S. 29, (1944) .. 4 Theatre Enterprises, Inc. v. Paramount Film Distributing Car SO6 Cie Ser (ee eet A war sccueesuesee 17, 18 Trabert & Hoeffer, Inc. v. Piaget Watch Corp., 633 F.2d Ore. Coe Ga SOee occ kaa dvsbsuewoacseans 10, 11 Trist v. First Federal S.&L. Ass’n of Chester, 466 F.Supp. ee ee ee, | Se eres he 10 United States v. General Motors Corp., 384 U.S. 127 PED fb oni a cS UR nee se eee 9 United States v. Parke, Davis & Co., 362 U.S. 29 (1960) . 9 United States v. Socony-Vacuum Oil Co., 310 U.S. 150 CREE. 5 an — 85 the plaintiff. Clayton Act, § 2(a) as amended by Robinson- Patman Price Discrimination Act, 15 U.S.C.A. § 13(a). 33. Trade Regulation—929 It was not sufficient for plaintiff to establish price discrimi- nation in order to succeed on its claim under the Robinson- Patman Act on the theory that the amount of discrimination could serve as the basis in measure of damages, thus showing injury. Clayton Act, § 2(a) as amended by Robinson-Patman Price Discrimination Act, 15 U.S.C.A. § 13(a). 34. Trade Regulation—931 The amount of discrimination by seller is not the measure of damages in a price discrimination action. Clayton Act, § 2(a) as amended by Robinson-Patman Price Discrimination Act, 15 U.S.C.A. § 13(a). 35. Trade Regulation—929 In the absence of any evidence as to how many customers gasoline retailer lost to competitors as a result of alleged price discrimination by oil company, gasoline retailer failed to pro- vide a basis upon which a jury could determine the extent of any injury which the retailer suffered as a result of any price dis- crimination and thus failed to prove a case under the Robinson- Patman Act. Clayton Act, § 2(a) as amended by Robinson- Patman Price Discrimination Act, 15 U.S.C.A. § 13(a). 36. Trade Regulation—929 Testimony that two retailers bought from one of distribu- tor’s competitors on occasions because that competitor could give them a better price than plaintiff distributor could was too general and inconclusive to form the basis for a jury determina- tion of the amount of damages suffered by the plaintiff distribu- tor as a result of any price discrimination by the oil company and was thus insufficient to establish the existence of injury re- quired to succeed on a claim under the Robinson-Patman Act. Clayton Act, § 2(a) as amended by Robinson-Patman Price Discrimination Act, 15 U.S.C.A. § 13(a). 86 37. Trade Regulation—931 Competitor-by-competitor breakdown of the damages which plaintiff has incurred as a result of alleged price discrimination must be shown before the plaintiff can recover. Clayton Act, § 2(a) as amended by Robinson-Patman Price Discrimination Act, 15 U.S.C.A. § 13(a). 38. Federal Courts—17 Where the facts involved in the state law unfair competition and breach of contract claims and those involved in the Lanham Act claims were not only arising from a common nucleus but also were identical, court had pendent jurisdiction over the state claims. 39. Contracts—316(1) Where oil company objected to breach which occurred when retailer sold other products under the trademark of the oil company and then terminated the distributorship agreement and never reinstated it but rather continued to supply gasoline to the retailer on the basis of an informal agreement and where, for six years, oil company had no choice but to supply the retailer with gasoline pursuant to federal regulations, the oil company had not waived its claims of breach of the distributor agreement by the sale of other products under the oil company’s trademark. 40. Declaratory Judgment—143 Where oil company originally sought damages because of retailer’s breach of distributorship agreement and violation of Lanham Act, oil company’s subsequent agreement to limit its damages claim to the amount of any judgment entered against it on the retailer’s antitrust claim did not vitiate its breach of con- tract claim; oil company, which was seeking only declaratory and injunctive relief, needed only to show that a breach had oc- curred and that continuation of the breach would result in harm to it. Lanham Trade-Mark Act, §§ 32(1), 43(a), 15 U.S.C.A. §§ 1114(1), 1125(a). 87 41. Contracts—312(2) Trade Regulation—432, 873.5 Action of gasoline retailer in selling other products under oil company’s trade name constituted a breach of the distributor agreement with the oil company and a violation of Lanham Act, the New Jersey Fair Sales Act, the New Jersey Unfair Motor Fuel Practices Act, and the common law of unfair competition. Lanham Trade-Mark Act, §§ 32(1), 43(a), 15 U.S.C.A. §§ 1114(1), 1125(a); N.J.S.A. 56:6-2(g), 56:41-1. 42. Trade Regulation—873.5 Actions to restrain violation of the New Jersey Unfair Mo- tor Fuel Practices Act are not limited to suits against retail dealers. N.J.S.A. 56:6—2(g), 25. 43. Contracts—312(1), 321(1) Trade Regulation—508 Where oil company agreed to and did provide retailer with gasoline carrying the oil company’s brand, fact that some of that gasoline was refined by other companies did not show that oil company breached its agreement with the retailer or that it acted in pari delicto with the retailer so as to preclude it from recover- ing for breach of distributor agreement and Lanham Act viola- tion when the retailer sold gasoline, which it obtained from others, under the oil company’s trade name. 44, Trade Regulation—92 Owner of the trademark has the right to decide what prod- ucts are to be marketed under its trademark irrespective of whether it takes any action beyond selecting them. 45. Declaratory Judgment—346, 347 Evidence that oil company and retailer had been at logger- heads for close to ten years, and that, if oil company were to obtain a declaratory judgment that retailer had violated its dis- tributor agreement and various trademark laws, the oil company 88 might obtain some rights under the Petroleum Marketing Prac- tices Act demonstrated that the oil company was entitled to declaratory relief with respect to its claims of breach and in- fringement despite a claim that there was no case or controversy between the parties. 28 U.S.C.A. § 2201; Petroleum Marketing Practices Act, § 102(c) (1), 15 U.S.C.A. § 2802(c)(1). 46. Trade Regulation—873.5 Violations of disiributor agreement and trademark infringe- ment by gasoline retailer over a period of at least five years, in- cluding times after the filing of lawsuit challenging those prac- tices showed a sufficient threat of recurrence of the practice to entitle oil company to injunction prohibiting the retailer from commingling the oil company’s gasoline with other gasoline and selling all that gasoline under the oil company’s trade name. 47. Injunction—57 Evidence showed that, if retailer continued to sell, under the trade name of a major oil company, gasoline obtained from other sources, oil company would be greatly harmed whereas, if the retailer did not do so, it would suffer no harm as a result of an injunction, so that injunctive relief against the practice was proper. On Injunctive Relief 48. Trade Regulation—930 Fact that court had directed verdict for oil company on retailer’s Robinson-Patman claims because the retailer had failed to make the requisite showing of injury did not preclude the re- tailer from obtaining injunctive relief under the Act. Clayton Act, § 2(a) as amended by Robinson-Patman Price Discrimina- tion Act, 15 U.S.C.A. § 13(a). 49. Trade Regulation—914 Action of oil company in entering into agreements with its distributor which provided that the oil company could either deliver the product to the distributor at its own expense or allow 89 the distributor to pick up the product at whatever point the oil company designated, giving the distributor an allowance for as- suming the cost of hauling the product to its bulk plant, did not constitute price discrimination; similarly, its change of one dis- tributor’s pickup point, with a related reduction in the hauling allowance, did not violate the Robinson-Patman Act. Clayton Act, § 2(a) as amended by Robinson-Patman Price Discrimina- tion Act, 15 U.S.C.A. § 13(a). 50. Trade Regulation—921 Gasoline retailers which purchased gasoline from distribu- tor on a cost-plus basis were not purchasers from the oil com- pany within the meaning of the Robinson-Patman Act. Clayton Act, § 2(a) as amended by Robinson-Patman Price Discrimina- tion Act, 15 U.S.C.A. § 13(a). Mitchell A. Kramer, Steven Kapustin, Philadelphia, Pa. for plaintiffs. Randall B. Robinson, Texaco, Inc., White Plains, N. Y., Duane, Morris & Heckscher, Jane D. Elliott, Philadelphia, Pa., Kay, Scholer, Fierman, Hays & Handler, Ira S. Sacks, New York City, for defendant. MEMORANDUM CAHN, District Judge. On the eighth day of trial in this labyrinthine antitrust case I directed a verdict in favor of the defendant. (N.T. 1860). The directed verdict did not dispose of all of the issues in the case, however, and the parties agreed to resolve one of these issues amicably and to submit the others to this court for a decision based on their written briefs.t (N.T. 1889-91). Now that I have received those briefs and had an opportunity to carefully review 1 The issue which the parties have agreed to resolve amicably involves a contract claim by plaintiff Sweeney against Texaco. The issues which remain for the court’s decision are Texaco’s counterclaims against Sweeney and the plaintiffs’ claims for injunctive relief. I will decide Texaco’s counterclaims in Part VIII of this opinion, but plaintiffs’ claims for injunctive relief will be the subject of a separate opinion. 90 the record, I will explain why I decided to grant the defendant’s motion for a directed verdict. I will also rule on one of the two issues which remain in this case. Before undertaking that task, however, I wish to set forth the facts and procedural history of this litigation.’ I, FACTS The plaintiff, Edward J. Sweeney & Sons, Inc. (Sweeney), is a wholesaler and distributor of Texaco gasoline in the Eastern Pennsylvania and Southern New Jersey markets.* In addition to its wholesale business Sweeney owns several retail gasoline sta- tions.t The defendant, Texaco, Inc. (Texaco), is a refiner of gasoline and other petroleum products. Sweeney has been in the wholesale gasoline business since 1944,.° (N.T. 90). After sev- eral years as a consignee and wholesaler for other companies it first became a Texaco wholesaler and distributor in 1958 (N.T. 90-94). It has remained a Texaco wholesaler and distributor up to the present time. (N.T. 94). In 1963 Sweeney and Texaco entered into a distributor agreement which ultimately led to this litigation. (1963 Distribution Agreement; Plaintiffs’ Exhibit 4; N.T. 100). 2 Due to the procedural posture of the case, this account of the facts will reflect only those which are uncontroverted. Inferences will be drawn in favor of the plaintiff. Columbia Metal Culvert Co. v. Kaiser Aluminum & Chemical Corp., 579 F.2d 20 (3d Cir.), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978). See Patzig v. O'Neil, 577 F.2d 841 (3d Cir. 1978). 3 Plaintiffs Mission Gas Oil Co., Inc., and Petroleum Products Co., are distributors who bought gasoline from Sweeney. (Plaintiffs’ complaint { 9 & 10). Their claims derive from Sweeney's and were not the subject of evidence introduced at trial. (See note 15, infra). Since the issues now before the court involve Texaco’s liability to Sweeney for the actions it took toward Sweeney, this opinion will refer to Sweeney as the plaintiff. 4 Sweeney owns these stations through its subsidiaries. (N.T. 14; Defendant's Exhibit 196). 5 Sweeney began as a partnership which later became a corporation. Since the change in form is not relevant to this litigation, both the part- nership and the corporation will be referred to as “Sweeney”. (See N.T. 100). 91 Prior to 1965 Sweeney marketed gasoline through full- service gasoline stations. (N.T. 102). These stations provided services such as greasing, lubrication, and tuneups in addition to the selling of gasoline. (N.T. 101). Sometime in 1965 or 1966 Sweeney’s stations began to sell gasoline at a discount. (N.T, 102). Although other discount gasoline stations sold only unbranded gasoline, the Sweeney stations sold Texaco branded gasoline at a price of between one and three cents per gallon less than the price of other branded gasoline sold in the area.". (N.T. 132, 145, 156-163). After the adoption of the discount con- cept, Sweeney’s gallonage increased steadily until in 1968 it won a wholesaler’s gasoline sales contest for having shown the high- est gallonage increase of all the Texaco distributors in the area. ( Plaintiffs’ Exhibit 6). As Mr. Richard V. Sweeney, president of the plaintiff cor- poration testified, the Sweeney stations were able to offer a dis- count primarily because of two factors: (1) they ceased to offer any services other than the sale of gasoline and related products, becoming “gas & go” operations (N.T. 15, 102), an (2) they had lower freight costs than their competi- tors due to their proximity to the Texaco terminal (N.T. 179). It is the second factor that forms the basis of the claims made in this case. When Texaco sells gasoline to its distributors it charges a price which includes the cost of delivering the product to the distributor’s bulk plant—a delivered price. (See, e.g. Plaintiffs’ Exhibit 4). (N.T. 1251-56). However, if the distributor picks up the gasoline himself and thereby saves Texaco the cost of delivery, Texaco gives him a discount or hauling allowance. Although there are several methods by which Texaco could compute the amount of the hauling allowance (N.T. 34-37. * Unbranded gasoline or stations are those that are not identified with a major oil company. (N.T. 93-94, 123). 92 1251-56), in its dealings with Sweeney Texaco based the haul- ing allowance on the lowest common carrier rate applicable between a designated Texaco distribution point and the Sweeney bulk plant. (See, e.g., Plaintiffs’ Exhibit 5).’ Since Sweeney had and continues to have its bulk plant in Pottstown, Pennsylvania, under this arrangement it could receive an allowance for the cost of hauling the product from the Texaco distribution point to Pottstown. (N.T. 109). From 1961 until 1970, the distribu- tion point which Texaco designated as Sweeney’s pick up point was the Texaco bulk plant in Westville, New Jersey. (N.T. 172). Sweeney thus received a hauling allowance on the lowest com- mon carrier rate applicable between Westville and Pottstown. (N.T. 174). Between 1965 and 1970 Sweeney acquired numerous re- tail gasoline stations within approximately twenty miles of Texa- co’s Westville, New Jersey, terminal. (N.T. 120-46, 177). Al- though most of these stations had been selling unbranded gaso- line at a discount, upon acquisition by the Sweeney interests these stations became branded Texaco stations. (N.T. 120-46).° Unlike other branded stations, however, the Sweeney stations sold branded gasoline at a discount; they generally tried to price their product above unbranded but below branded gasoline. (N.T. 128-133). It was the hauling allowance that subsidized this practice. (N.T. 118). Due to the proximity between these newly acquired Sweeney stations and Texaco’s Westville bulk plant, Sweeney could pick up the product in Westville and transport it a short distance to its New Jersey and Philadelphia area stations. (N.T. 176-7). Sweeney did not transport all of the product it picked up at Westville to its bulk plant in Pottstown. This practice en- abled Sweeney to receive an allowance for hauling product from 7 This exhibit was introduced but not admitted into evidence at the trial. 8 Only one of the stations acquired by Sweeney during this period was a branded station (N.T. 144); the station in Essington, Pennsylvania, had been a Gulf station. (Id.). 93 Westville to Pottstown (roughly fifty miles), when in reality it was hauling product from Westville to points ten to twenty miles away.” (N.T. 177-179). (See Defendant’s Exhibit 1). Re- ceipt of this allowance permitted Sweeney to cut its costs and sell gasoline at a discount. (/d. 178-9). In effect the hauling allowance underwrote the discount. After adopting the concept of selling branded gasoline at a discount through “gas & go” stations Sweeney prospered. Its prosperity did not augur well with its competitor Texaco re- tailers, however, and some of these retailers complained, to Texaco that Sweeney’s discount pricing was hurting them (N.T. 418). Sweeney contends that Texaco conspired with these re- tailers to raise the cost of Texaco gasoline to Sweeney and thus force Sweeney to raise its prices. It cites the actions of Texaco in 1970 and 1971 as evidence of this alleged conspiracy. In the winter of 1970, Texaco personnel informed Sweeney that Texaco wished to change the Sweeney pick up point from Westville, New Jersey, to Macungie, Pennsylvania, where Tex- aco had a pipeline terminal. (N.T. 197). Macungie, Pennsyl- vania, is much closer to Pottstown (approximately twenty miles) than Westville, New Jersey (approximately fifty miles), and this change would have had the effect of reducing Sweeney’s hauling allowance by about fifty percent (N.T. 180). (See Defendant’s Exhibit 1). Given the importance of the hauling allowance to Sweeney’s competitive position, Sweeney strenuously objected to this change. (N.T. 180).*° Texaco then notified Sweeney that it ® Sweeney did have some stations in the Pottstown area, and it there- fore hauled some of the product to Pottstown. (N.T. 107, 117, 177). However, it is the existence of the stations close to Westville and Sweeney’s practice of direct delivery that is material to this case. 10In 1967 Texaco had decided that it would be economically advan- tageous for it to have Sweeney pick up its product at the Texaco terminal in Macungie, Pennsylvania, rather than at the Westville terminal and it proposed this change to Sweeney. (See Plaintiffs’ Exhibit 39; Defendant's Exhibit 439; N.T. 1287-1298, 1365-1375). Sweeney objected to such change, and it was not put into effect. (N.T. 181-184). The incident is mentioned here only for the sake of completeness; whatever favorable inferences Texaco would have a jury draw from it are rejected in light of the procedural posture of the case. 94 was exercising its right to cancel the 1963 distributor agree- ment.': (N.T. 180-81; Plaintiffs’ Exhibit 8). As a result of negotiations between Texaco and Sweeney, however, Texaco agreed to continue to give Sweeney the Westville to Pottstown hauling allowance for an additional ninety days. (N.T. 187- 188; Plaintiffs’ Exhibit 10). This was designed to allow Sweeney to either adjust its operation to the new pick up point or seek an alternative source of supply. Notwithstanding its efforts to that end Sweeney was unable to secure another supplier. (N.T. 188-190; Plaintiffs’ Exhibits 19a-19u). In March of 1971, after further negotiations the parties arrived at a compromise: Sweeney would receive the Macungie to Pottstown hauling allowance effective June 1, 1971, but it would be permitted to pick up product at cither the Westville or Macungie terminals. (March | letter agreement; Plaintiffs’ Exhibit 10). This enabled Sweeney to continue to supply its southern New Jersey stations from the Westville termi- nal and mitigated the effect of the change in the hauling allow- ance.” In December of 1971, however, Texaco notified Sweeney that effective February 29, 1972, it would terminate both the 1963 distributor agreement and the March 1 letter agreement. (N.T. 193-194; Plaintiffs’ Exhibit 16). Although Sweeney again tried to obtain an alternate source of supply, it was again unsuccessful. (N.T. 197-199). After various negotiations, dur- ing which Sweeney threatened to seek injunctive relief, Texaco agreed to continue supplying Sweeney until such a time as it gave Sweeney ten days notice of its intention to discontinue its 11 This agreement contained a clause which allowed either party to cancel it by serving written notice of their intention sixty days prior to its anniversary date (See Plaintiffs’ Exhibit 4). 12 [In return for this arrangement Sweeney signed a document which Texaco characterizes as a covenant not to sue. (Defendant’s Exhibit 3). This court has already ruled that the document does not constitute a covenant not to sue. (N.T. 1888). (See N.T. 542-545). 95 supply. (Defendant’s Exhibit 68A).'* Sweeney does not contest the fact that Texaco never gave it such notice; indeed, Texaco has continued to supply Sweeney up to and including the present time.** : Il. ALLEGATIONS In 1974, wary of the tolling of the statute of limitations, Sweeney brought the instant suit. Sweeney alleged that the 1970 change in Sweeney’s hauling allowance resulted from a con- spiracy between Texaco and other Texaco retailers. According to Sweeney the object of this alleged conspiracy was to fix the resale price of Texaco gasoline. (N.T. 1802). Furthermore, Sweeney alleged that the 1971 termination of its distributor agreement also resulted from a price fixing conspiracy. Accord- ing to Sweeney these alleged conspiracies are violative of § 1 of the Sherman Act, 15 U.S.C. § 1, and entitle it to treble damages as well as injunctive relief.’ 13Tn return for Texaco’s promise to continue supplying Sweeney, Sweeney allegedly agreed not to sue Texaco. (See Defendant’s Exhibit 68A). Unlike the written agreement which followed the March 1 letter agreement, (see note 12 and accompanying text, supra), the agreement referred to here was not reduced to writing. This court has already ruled that whatever agreement Texaco reached with Sweeney on that issue does not constitute a covenant not to sue. (N.T. 1888). 't Whether Texaco’s failure to terminate this agreement resulted from the advent of federal regulation, as Sweeney alleges (N.T. 21) or from some other motive is irrelevant to this case, which involves alleged con- spiracies in 1970 and 1971. However, for purposes of this motion we will assume that, as Sweeney contends, Texaco would have ceased to supply Sweeney sometime after 1972 if federal regulations adopted after 1972 had not prevented it. On June 1, 1979, this court granted the defendant’s motion for partial summary judgment as to the claims of plaintiffs Mission Gas Oil Co. and Petroleum Co. for damages. The plaintiffs through their attorneys have represented to the court that denial of their claims for injunctive re- lief under §§ 1 and 2 of the Sherman Act follows from the grant of the defendant’s motion for a directed verdict on plaintiff Sweeney’s claims for damages under those sections. The court will dispose of all of the plaintiffs’ claims for injunctive relief in a subsequent memorandum and order, however. 96 [1] In addition Sweeney claimed that Texaco’s actions in 1970 and 1971 constituted an attempt to monopolize in viola- tion of § 2 of the Sherman Act, 15 U.S.C. § 2, and entitle it to treble damages as well as injunctive relief.‘*° Sweeney also charged that imposition of the Pottstown to Macungie hauling allowance made it the victim of price discrimination in violation of § 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a). For this alleged violation Sweeney also sought damages and injunc- tive relief.” Other claims made by Sweeney were either resolved by agreement of counsel’® or withdrawn.’° Texaco responded to these allegations by asserting that it had changed Sweeney’s hauling allowance only because it was economically advantageous for it to do so and that it had termi- nated Sweeney because of Sweeney’s breaches of the hauling agreement and distributor contract, complaints received from customers about the condition of Sweeney’s stations, and, most importantly, the sale by Sweeney of non-Texaco gasoline and diesel fuel from Texaco pumps as well as its use of Texaco marked trucks to deliver non-Texaco gasoline. Texaco thus brought several counterclaims against Sweeney for Sweeney’s 16 See note 15 supra for the status of plaintiffs’ claims for injunctive relief. 17 Plaintiffs have taken the position that the grant of the defendant's motion for a directed verdict on plantiff Sweeney’s claims for damages un- der the Robinson-Patman Act does not dictate the outcome of their claims for injunctive relief. They have submitted briefs on this issue, which this court will decide by subsequent memorandum and order. 18 Sweeney’s claim for damages for Texaco’s alleged breach of the hauling agreement was resolved with Texaco’s agreement to pay Sweeney whatever they determined the applicable ICC common carrier rate to be. (N.T. 1781-83, 1860). The court will therefore dismiss this claim pur- suant to Local Rule of Civil Procedure 23(b). However, the court will deny Texaco’s request for reimbursement of expenses occasioned by any changes in plaintiffs’ theory of damages. (N.T. 1783). This is a compli- cated case and I think it only fair that each side bear the burden of that complexity. 19 The plaintiff withdrew his claims under § 2(e) of the Robinson- Patman Act, 15 U.S.C. § 13(e). (N.T. 1781). 97 alleged trademark infringement and breach of contract.*° Al- though Texaco acknowledged that it had received complaints from other Texaco retailers about the competitive effect of Sweeney’s discount pricing, Texaco vehemently denied that it had taken any action as a result of those complaints. Thus, in response to Sweeney’s § 1 claim Texaco argued that unilateral action did not violate § 1 of the Sherman Act and that mere complaints could not establish the existence of a con- spiracy. In response to Sweeney’s § 2 claim Texaco asserted that Texaco did not and indeed could not have attempted to monopo- lize the market of Texaco gasoline because Texaco gasoline did not represent a separate market. In response to Sweeney’s Robinson-Patman § 2(a) claim Texaco argued that the change in Sweeney’s hauling allowance did not violate that section be- cause the hauling allowance is a functional discount which is not part of the price for purposes of the Robinson-Patman Act and that, in any event this court lacked jurisdiction to decide the Claim due to the absence of sales made in interstate commerce. Texaco also argued that Sweeney had failed to prove that it sustained the kind of economic damage required for recovery under § 2(a) of the Robinson-Patman Act and could therefore recover nothing. Ill. PROCEDURAL HISTORY After nearly five years of pretrial proceedings marked by discovery disputes the case was called for trial in March of 1979. However Sweeney, who had not filed its first set of interroga- tories until January 31, 1979, argued that it could not proceed to trial at that time. The court agreed to give Sweeney further time to prepare the case but admonished that given the age of the case, it would not grant further continuances. On June 5, 1979, the case finally went to trial. Since Sweeney still claimed that it needed additional time to prepare certain aspects of the case, the court agreed to tailor the trial schedule to Sweeney’s 20 The court has not yet decided these claims, which the parties sub- mitted for decision to this court following the grant of the defendant's motion for a directed verdict. The merits of these claims are discussed in Part VIII of this opinion. 98 needs. (N.T. 80). Based on its previous experience with this case the court was, however, unwilling to grant another con- tinuance. Throughout the trial the court allowed Sweeney to con- tinue to conduct discovery. (N.T. 59-60, 339, 346). Indeed, on the first day of trial the court permitted a change in Sweeney’s damage theory despite Texaco’s claims that it would be preju- diced and put to considerable expense by such a belated altera- tion.** (N.T. 63-81, 332-47). I permitted this because, as I remarked from the bench, I did not want to see Sweeney’s case “harmed through some inadvertent oversight.” (N.T. 73). I am certain that no such harm has occurred. Sweeney presented all of the admissible evidence which it deemed necessary and can- not, five years after bringing the case, be heard to complain about inadequate preparation time. On Monday, June 11, 1979, the fourth day of trial, Texaco gave this court a copy of its motion for a directed verdict. On the next day, when Sweeney was close to the conclusion of its case in chief, the parties discussed how the court should proceed. (N.T. 1236-1240). To accommodate the interests of judicial economy and fairness to the litigants, I decided to defer further consideration of the arguments raised by Texaco’s motion until the following Monday.** Thus, after Sweeney rested, Texaco began to present its case.** By Monday, the date set for argu- “1 Sweeney wanted to change its damage theory from the difference be- tween the Westville to Pottstown hauling allowance and the Macungie to Pottstown hauling allowance to the difference between the hauling allow- ance which Texaco gave Sweeney and that which Texaco gave Sweeney's competitors. (N.T. 62, 332-340). Although the court allowed Sweeney to do this, Sweeney seems to have relied on his original damage theory none- theless. See notes 60, 66 infra. “2 Since the court planned to be in recess Thursday and Friday, Sweeney would have ample opportunity to prepare a reply. “8 This procedure is authorized by Fed.R.Civ.P. 50(a) which provides that, A party who moves for a directed verdict at the close of the evidence offered by an opponent may offer evidence in the event that the motion is not granted, without having reserved the right so to do and to the same extent as if the motion had not been made. 99 ment on its directed verdict motion, Texaco had rested and Sweeney had concluded its case in rebuttal. This procedure, agreed to by the parties, gave Sweeney ample time to reply to Texaco’s motion and efficiently utilized the jury’s time by keeping the case fresh in their minds and leaving it ready for their decision in the event that Texaco’s motion for a directed verdict should be denied.” On Monday, June 18, 1979, the eighth day of trial, I granted Texaco’s motion for a directed verdict. In Part IV of this memorandum I will set forth the standards applicable to such a motion. In Parts V through VIII I will discuss the issues raised by the motion and explain the reasons for my decision. In Part VIII I will discuss and d cide the issues raised by Tex- aco’s counterclaims for trademark infringement and breach of the distributor agreement. IV. STANDARDS APPLICABLE TO A MOTION FOR A DIRECTED VERDICT [2,3] Rule 50(a) of the Federal Rules of Civil Procedure allows a party to move for a directed verdict “at the close of the evidence offered by an opponent... .” To decide such a motion the trial judge must analyze all the evidence presented by the party opposing the motion, reviewing that evidence in the light most favorable to that party and making all inferences in his favor. Continental Ore Co. v. Union Carbide and Carbon Corp., 370 U.S. 690, 696, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962); Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chem- ical Corp., 579 F.2d 20, 25 (3d Cir.), cert. denied, 439 US. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978); Fireman’s Fund Insurance Co. v. Videfreeze Corp., 540 F.2d 1171, 1178 (3d *4 Although the court once suggested the possibility of bifurcating the case, (N.T. 80) this suggestion was never adopted. Indeed, before the court heard oral argument on Texaco’s motion, the parties had submitted points for charge and the court had circulated proposed jury inter- rogatories among counsel. If the court had denied Texaco’s motion for a directed verdict it would have conducted a charge conference and pro- ceeded to charge the jury as soon as practicable thereafter. 100 Cir. 1976), cert. denied, 429 U.S. 1053, 97 S.Ct. 767, 50 L.Ed.2d 770 (1977); Denneny v. Siegel, 407 F.2d 433, 439 (3d Cir. 1969); Dovberg v. Dow Chemical Co., 353 F.2d 963, 968 (3d Cir. 1965), cert. denied, 384 U.S. 907, 86 S.Ct. 1344, 16 L.Ed.2d 360 (1966). The trial judge cannot pass on either the weight or the credibility of the evidence, Brady v. Southern R. Co., 320 U.S. 476, 479-80, 64 S.Ct. 232, 88 L.Ed. 239 (1943), Burchill v. Kearney-National Corp., Inc., 468 F.2d 384 (3d Cir. 1972), 5A Moore’s Federal Practice, § 50.02[1] at 50-25, since it must leave to the jury the task of “evalu- at[ing] contradictory evidence and draw[ing] inferences there- from.” Fireman’s Fund Ins. Co. v. Videfreeze Corp., 540 F.2d 1171, 1178 (3d Cir. 1976), cert. denied, 429 U.S. 1053, 97 S.Ct. 767, 50 L.Ed.2d 770 (1977) (citations omitted). The trial judge, however, retains power to decide whether the evi- dence, so reviewed, would support a jury verdict in favor of the party opposing the motion. That party must have introduced more than a scintilla of evidence ftom which the jury could find in his favor; Fireman’s Fund Ins. Co. v. Videfreeze Corp., 540 F.2d 1171, at 1179 n. 6; Denneny v. Siegel, 407 F.2d 433 (3d Cir. 1969); 5A Moore’s Federal Practice, § 50.02[1] at 50-31 n. 22; he must have introduced sufficient evidence to support a jury verdict in his favor. Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chemical Corp., 529 F.2d at 25; Hourston v. Harvlan, Inc., 457 F.2d 1105, 1108 (3d Cir. 1972). If a rea- sonable jury could not find that the party opposing the motion for a directed verdict had proved his case by a preponderance of the evidence the trial j:dge must direct a verdict against him. [4] Sweeney has failed to introduce even a scintilla of evi- dence in support of its claim. It follows that it has also failed to introduce sufficient evidence to support a jury verdict in its favor. I reached this conclusion after careful review of the evi- dence and with full awareness of the difficulties inherent in prov- ing an antitrust conspiracy. See Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). Like other courts, however, I recognized that “if an antitrust plaintiff, as well as any other plaintiff, does not present 101 enough evidence within his case-in-chief to support a reasonable finding in his favor, a district court has a duty to direct a verdict in favor of the opposing party.” Chisholm Bros. Farm Equip- ment Co. v. International Harvester Co., 498 F.2d 1137, 1139- 40 (9th Cir.), cert. denied, 419 U.S 1023, 95 S.Ct. 500, 42 L.Ed.2d 298 (1974).** I will not shirk that duty. -V. SWEENEY’S DAMAGE CLAIMS UNDER § 1 OF THE SHERMAN ACT [5] Section 1 of the Sherman Act proscribes “[e]very con- tract, combination, . . or conspiracy, in restraint of trade . .” 15 U.S.C. § 1. To establish a defendant’s liability under this section a plaintiff must therefore prove that the defendant en- tered into a contract, combination, or conspiracy and that said conspiracy constituted a restraint of trade. Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). The issue in this case is whether Sweeney has introduced enough evidence to allow the jury to conclude that Texaco conspired to *° Texaco has taken the position that Chisholm requires Sweeney to introduce direct evidence of a conspiracy to survive a motion for a di- rected verdict. I disagree. Chisholm establishes the quantum of evidence which the plaintiff must introduce; it does not restrict the quality of that evidence. A contrary reading would make it practically impossible for plaintiffs to prevail in cases like this and would ignore the concerns ex- pressed by the Supreme Court in Poller. Indeed, in Westinghouse Electric v. CX Processing Labs, Inc., 523 F.2d 668 (9th Cir. 1975), the same court that decided Chisholm noted that the party opposing the motion for a directed verdict “was entitled to benefit from all reasonable inferences to be drawn from its evidence.” 523 F.2d at 673. If the court had re- quired that the plaintiff present direct evidence of the existence of a con- spiracy it would not have said anything about the need for drawing in- ferences. In any event, whatever the validity of Texaco’s contention in the Ninth Circuit, the law in this circuit is to the contrary. In Venzie Corp. v. United States Mineral Prod. Co., Inc., 521 F.2d 1309 (3d Cir. 1975), the court stated unequivocally that the plaintiffs “could rely on the inference of the existence of an agreement from circumstantial evi- dence.” 521 F.2d at 1312. 102 fix the retail price of Texaco gasoline.** On June 8, 1979, I ruled that Sweeney had failed to meet this burden. [6] Sweeney alleged that Texaco violated § 1 of the Sher- man Act by conspiring to change Sweeney’s hauling allowance in 1970. Sweeney introduced two items of evidence in support of its § 1 claim. First, it showed that some Texaco retailers had complained to Texaco that Sweeney’s policy of discount pricing was hurting their sales. Second, Sweeney produced one James P. Rodden, a former Texaco employee now working for a Sweeney- related enterprise, who testified he thought that Texaco had terminated Sweeney because of Sweeney’s pricing policy. This evidence cannot, as a matter of law, support a jury finding of a contract, combination, or conspiracy between Texaco and other Texaco retailers either in 1970 or 1971. Prior to the oral argument on Texaco’s motion for a di- rected verdict Sweeney had not specified the nature of this con- spiracy or the identity of the putative co-conspirators. Even at oral argument the court was unable to obtain this information. (Compare N.T. 1802-08 with N.T. 1811-17). Before granting Texaco’s motion I evaluated whether the evidence would support a finding of either a horizontal or vertical price fixing combina- tion or conspiracy in either 1970 or 1971. I will follow that analysis here. A. 1970 COMBINATION OR CONSPIRACY— CHANGE IN SWEENEY’S HAULING ALLOWANCE. 1. HORIZONTAL PRICE FIXING AGREEMENT. [7, 8] To find that Sweeney had introduced sufficient evi- dence to allow the jury to conclude that Texaco had conspired with other Texaco retailers to fix the retail price of Texaco gaso- line I would have to find that competitors’ complaints, without *6 There is no question that such a conspiracy, if established, would constitute an unreasonable restraint of trade. Cernuto, Inc. v. United Cabinet Corp., 595 F.2d 164 (3d Cir. 1979). See United States vy. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). 103 more, permit an inference of concerted action.”’ Like numerous courts before me, I hold that evidence of competitors’ complaints standing alone cannot support a finding of liability under § 1 of the Sherman Act. Westinghouse Electric Corp. v. CX Pro- cessing Laboratories, 523 F.2d 668 (9th Cir. 1975); Klein v. American Luggage Works, Inc., 323 F.2d 787 (3d Cir. 1963); Carr Electronics Corp. v. Sony Corp. of America, 472 F.Supp. 9 (N.D.Cal.1979); Carbon Steel Products Corp. v. Alan Wood Steel Co., 289 F.Supp. 584 (S.D.N.Y.1968). In Carr Electronics Corp. v. Sony Corp. of America, 472 F.Supp. 9 (N.D.Cal.1979), the court faced this precise issue. Carr, a dealer of Sony products, claimed that Sony had termi- nated its dealership because Carr had adopted a discount pricing policy as a result of which Carr’s competitors had “complained forcefully to Sony that they were unhappy with the fact that several low-overhead dealers were underselling them.” 472 F.Supp. at 10 (footnote omitted). Carr thus brought an action against Sony alleging that Sony had conspired to fix the retail price of television sets and thus violated § 1 of the Sherman Acct. Faced with Sony’s motion for summary judgment, Carr argued [T]hat the court must, as a matter of law, permit the infer- ence that the complaints of the dealers, followed by Sony’s termination of Carr, constitutes an illegal combination in violation of the antitrust laws. 27 Such a combination, if shown, would effect a horizontal restraint. As the court of appeals explained in Cernuto, Inc. v. United Cabinet Corp., 595 F.2d 164 (3d Cir. 1979), {I]f the action of a manufacturer or other supplier is taken at the direction of its customer, the restraint becomes primarily horizontal in nature in that one customer is seeking to suppress its competition by utilizing the power of a common supplier. Therefore, although the termination in such a situation is, itself, a vertical restraint, the desired impact is horizontal and on the dealer, not the manufacturer, level. 595 F.2d at 168. 104 Id. 472 F.Supp. at 12. The court rejected that argument. Like Sweeney, Carr relied on Girardi v. Gates Rubber Company Sales Division, Inc., 325 F.2d 196 (9th Cir. 1963). Like the Carr court, I find that the facts of Girardi were “much more extreme than those of the instant case,” 472 F.Supp. at 13, and that Sweeney’s reliance on Girardi is unwarranted. The plaintiff in Girardi was a discount dealer of the de- fendant’s products who had argued that its termination by the defendant had come as a result of complaints by the plaintiff's competitors. Unlike the plaintiffs in both Carr and the instant case, however, the plaintiff in Girardi had shown that one of the defendant’s salesmen had actually threatened him with termi- nation if he dic aot cease discount pricing. 352 F.2d at 198. There is simply no such evidence in this case. Indeed, Sweeney’s president testified that Texaco never interfered with the way in which Sweeney arrived at the price at which it sold gasoline (N.T. 382),”* and that Texaco had never threatened to take any action in response to Sweeney’s marketing practices (N.T. 379) .” Moreover, the internal memoranda of the defendant in Girardi showed that management was concerned about exercis- ing control over the dealer’s marketing practices and actively sought ways of exercising that control. Again, there is simply no such evidence in this case. Although Texaco’s management was *8 By Texaco’s counsel to Mr. Sweeney: Q Now, my tenth and last question to you, Mr. Sweeney, is has Texaco ever interfered in the method or manner by which E. J. Sweeney and Sons Incorporated arrived at the price at which your company sold gasoline to any of your customers? A_ No. (N.T. 382). *° By Texaco’s counsel to Mr. Sweeney: Q Question Number 7, did Texaco ever take any action or threaten to withhold any action or refrain from performing certain acts should you market gasoline in a way that you felt was desirable, and which for one reason or another Texaco felt was undesirable? A No. (N.T. 379). 105 aware of the complaints, there is no evidence to show that it took any action in response to them. There is, however, an abundance of evidence that Texaco had other, legitimate reasons for chang- ing Sweeney’s hauling allowance and terminating its distributor agreement.” Thus, a marketing study conducted by Texaco had demonstrated that it would be more economical for Texaco to have Sweeney pick up at Macungie instead of at Westville. (Plaintiffs’ Exhibits 35, 39; Defendant’s Exhibit 438-439; N.T. 1287-1298, 1365-1378). Furthermore, Texaco had received numerous complaints from customers regarding the condition of Sweeney owned stations and had misgivings over Sweeney’s credit card practices. (N.T. 1304-1322). Most importantly, Texaco was concerned about Sweeney’s undisputed practice of commingling Texaco gasoline with gasoline purchased from other refiners, selling non-Texaco diesel fuel from Texaco pumps and using Texaco branded trucks to deliver non-Texaco gasoline.” (N.T. 1313; Plaintiffs’ Exhibit 18; Defendant’s Exhibits, 55, 64, 66, 435A-K). Significantly, the defendant in Girardi could point to no other justification for its actions, and indeed was so bold as to terminate the plaintiff's dealership in two areas where he engaged in discounting but not in a third where he did not en- gage in discounting. There is no similar evidence in this case, therefore like the Carr court, I have concluded that [I]t was on a much more forceful record that the Girardi court held that the jury should be permitted to infer a com- bination in violation of section 1 of the Sherman Act. The mere fact that dealers complained does not require sending the case to the jury, despite the appeal of some of the Girardi court’s language. 472 F.Supp. at 13. Even the facts of Carr itself are stronger than the facts of this case. In Carr, there was evidence, albeit of doubtful admis- 30 This evidence cannot and does not serve as the basis for my decision. I am noting it only to show the contrast between the strength of the facts in Girardi and the weakness of the facts in the case at bar. 31 These actions are the subject of Texaco’s counterclaim against Sweeney, which will be discussed in Part VIII hereof. 106 sibility, that one of the defendant’s salesmen had told the plain- tiff that other retailers were complaining and that the defendant “intended to take some action.” /d. at 13 n. 5. Sweeney never even attempted to introduce any evidence that Texaco either re- sponded to the complaints or told Sweeney that it would take any action in response thereto. My decision in this case thus follows a fortiori from the court’s decision in Carr. Other courts agree. In Carbon Steel Products Corp. v. Alan Wood Steel Co., 289 F.Supp. 584 (S.D.N.Y. 1968), the plaintiff, a wholesaler of steel products, alleged that the de- fendant manufacturer had conspired with other wholesalers in violation of § 1 of the Sherman Act. The plaintiff sought to survive the defendant’s motion for summary judgment by argu- ing that evidence of complaints to the defendant manufacturer by plaintiff's competitors would permit an inference of con- spiracy. The court rejected this argument and held that, A combination violative of Section 1 of the Sherman Act cannot be implied from the fact that some of Wood’s cus- tomers complained of Carbon Steel’s practices, since it was the normal working of the marketplace for them to have done so. Cf. Klein v. American Luggage Works, Inc., 323 F.2d 787, 791 (3d Cir. 1963). 289 F.Supp. at 588. Sweeney has shown even less evidence of a conspiracy than the plaintiff in Carbon Steel. In that case the plaintiff had sub- mitted copies of memoranda drafted by the defendant’s district sales manager to the attention of a marketing vice president and a general manager; after explaining the substance of the com- plaints received from plaintiff's competitors, these memoranda “urged that all business relations with Carbon Steel be severed.” 289 F.Supp. at 587. The court nevertheless granted the defend- ant’s motion for summary judgment on the ground that the plaintiff had failed to demonstrate the existence of a combina- tion. A similar conclusion follows in this case. Sweeney has not even introduced evidence of internal memoranda and in light of the Carbon Steel holding Sweeney can hardly maintain that 107 mere discussion of the complaints by Texaco management suffices to show the existence of a combination or conspiracy. Carbon Steel illustrates the difference between the type of internal communications which permit the inference of a com- bination and those which do not. In the former situation the communications show that the manufacturer knew of the com- plaints and planned specific actions in response thereto (Girardi). In the latter situation the communications show only that the manufacturer knew of the complaints (Carbon Steel, Carr). The courts agree that where the communications show only the manufacturer’s knowledge they cannot serve as the basis for an inference of a combination (Carbon Steel, Carr), whereas if the communications show knowledge plus an intent to act on the complaints, they can (Girardi). [9] This conclusion has its genesis in sound policy con- siderations, as the Carbon Steel court noted. It would be in- equitable to hold that the mere receipt of a complaint creates an inference of a combination between the recipient and the com- plainant.** The recipient cannot help receiving the complaint and it would be unfair, without additional evidence of the existence of a conspiracy, to hold him liable for something over which he has no control. It is only if he acts upon the com- plaints, thereby becoming more than a passive recipient, that he turns into a coconspirator and violates the antitrust laws. As the court of appeals has noted, “[t]he substantial law of trade conspiracies requires some consciousness of commitment to a common scheme.” Klein v. American Luggage Works, Inc., 323 F.2d 787, 791 (3d Cir. 1963), quoting United States v. Stan- *° It is irrelevant that the making of such a complaint could be con- strued as violative of § 1 of the Sherman Act. See note 27 supra. Even if that were so, to draw an inference of combination between the maker and the recipient of a complaint from the mere receipt of a complaint would be somewhat like holding that the subject of an attempted bride is guilty of bribery. The issue of the complainant's liability is not before me, how- ever, and I express no view on its merits. Neither Sweeney nor the plaintiffs in Carr or Carbon Steel sought to hold their competitors liable for violations of § 1 of the Sherman Act. 108 dard Oil Co., 316 F.2d 884, 890 (7th Cir. 1963). See Harold Friedman, Inc. v. Kroger Co., 581 F.2d 1068, 1078 (3d Cir. 1978). I can perceive no reason for departing from this rule. Contrary to Sweeney’s assertions, Cernuto, Inc. v. United Cabinet Corp., 595 F.2d 164 (3d Cir. 1979), does not require a different result. In Cernuto the court of < ypeals decided that an agreement between a manufacturer and one of his customers to refuse to deal with another customer would constitute a per se violation of § 1 of the Sherman Act. The plaintiff in Cernuto was a discount seller of the defendant’s products. The plaintiff alleged that the defendant, at the insistence of one of plaintiff's competitors, had refused to deal with the plaintiff. Since plain- tiff could not prove that the defendant’s conduct had any anti- competitive effect, he could recover only if the court held that the defendant’s conduct constituted a per se violation of § 1. 595 F.2d at 165. For the sole purpose of deciding the propriety of the district court’s grant of the defendant’s motion for summary judgment the court of appeals assumed that the plaintiff could show that the manufacturer terminated him as a result of the complaints. Jd. The court carefully pointed out that. it had be- fore it only the question of [W]hether the conduct at issue here—a manufacturer de- liberately withdrawing its product from a distributor that resold it for a price less than its competitors at the request of a competitor—should be classified as a per se violation of the [Sherman] Act. 595 F.2d at 166 (emphasis added). It answered that question in the affirmative. Cernuto does not govern this case, however. There is no question that if Sweeney had succeeded in proving the allega- tions in its complaint it would have made out a per se violation of the Sherman Act; that is all that Cernuto decided. The issue in this case—whether complaints permit the inference of a combination—was neither considered nor decided by the Cernuto court. Indeed the instant case presents the question that the trial judge in Cernuto will have to decide upon remand: 109 whether the plaintiff has introduced enough evidence of the allegations in his complaint to allow a jury to find in his favor. Thus, the court of appeal’s decision in Cernuto does not fore- close a decision favorable to the defendant in this case.** Aside from the evidence of complaints which other retailers made to Texaco, Sweeney introduced no evidence of a con- spiracy between Texaco and its retailers or wholesalers. I have concluded that on the basis of such evidence no reasonable jury could find that Texaco engaged in a combination or conspiracy in restraint of trade by changing Sweeney’s hauling allowance in 1970. 2. VERTICAL PRICE FIXING—RETAIL PRICE MAIN- TENANCE. [10] Sweeney also argued that Texaco conspired with the complaining dealers to maintain the resale price of Texaco gaso- line.** Alternatively, Sweeney argued that Texaco conspired with ‘8 Neither does the more recent decision in Mannington Mills, Inc. v. Congoleum Industries, Inc., 610 F.2d 1059 (3d Cir. 1979), filed sub- sequent to my ruling on Texaco’s motion for a directed verdict in this case, command a different result. In Mannington, as in Cernuto, the anti- trust claims were decided on a motion for summary judgment; therefore, as in Cernuto, the court in Mannington assumed the existence of an agreement between the plaintiff licensee and the defendant licensor to terminate competing licenses. At 1070. The court decided only whether that agreement violated the antitrust laws or whether the defendant’s “status as a patent monopolist immunizef[d] this otherwise actionable con- duct from antitrust attack.” At 1070. The court did not purport to decide the question at issue here. Moreover, the Mannington court objected to the entry of summary judgment before the plaintiffs had a full opportunity to conduct discovery. In this case, however, Sweeney has had ample opportunity to conduct all the discovery it desired and has received numerous indulgences from the ourt to that end. See Part III, supra. It cannot claim that its lack of evidence results from an inadequate Opnortunity to conduct discovery. ** The term retail price maintenance will be used herein to refer to any attempt by Texaco to influence the retail price of its gasoline, even if such an attempt extends only to attempting to raise or lower the price without setting forth a specific figure. 110 Sweeney as of the time Sweeney agreed to the change in the hauling allowance. Sweeney cites Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), and United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), in support of these contentions. However, as the Court of Appeals for the Second Circuit noted in Fuchs Sugars & Syrups, Inc. v. Amstar Corp., 602 F.2d 1025 (2d Cir. 1978), to succeed in such a claim the plaintiff must prove that the manufacturer had a program of resale price maintenance, that it sought the aid of plaintiff’s competitors in enforcing said program, and that its actions toward plaintiff were designed to secure compliance with the desired resale price. Sweeney has neither alleged nor proved any of these things. {11] In United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919), the Supreme Court made it clear that unilateral action by a manufacturer does not violate § 1 of the Sherman Act. This basic premise remains unchanged despite a series of Supreme Court decisions which defined and narrowed the limits of unilateral behavior. United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960); United States v. Bausch & Lomb Optical Co., 321 USS. 707, 64 S.Ct. 805, 88 L.Ed. 1024 (1944); F.T.C. v. Beech-Nut Packing Co., 257 U.S. 441, 42 S.Ct. 150, 66 L.Ed. 307 (1922); Frey & Son, Inc. v. Cudahy Packing Co., 256 U.S. 208, 41 S.Ct. 451, 65 L.Ed. 892 (1921); United States v. A. Schrader’s Son, Inc., 252 U.S. 85, 40 S.Ct. 251, 64 L.Ed. 471 (1920); Areeda, Antitrust Analysis, 559-560 (1974). The defendant in Colgate was a manufacturer who had published lists of the prices at which its products should be sold and had announced that it would refuse to sell to any dealers who failed to charge those prices. The Court refused to find that such conduct violated § 1 of the Sherman Act and held that, In the absence of any purpose to create or maintain a monopoly, [which would bring the case under § 2, not § 1] the act does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to par- 111 ties with whom he will deal; and, of course, he may an- nounce in advance the circumstances under which he will refuse to sell. 250 U.S. at 307, 39 S.Ct. at 468. The Court thus distinguished Colgate’s practice from that which it had condemned in Dr. Miles Medical Co. v. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911), where “the unlawful combination was effected through contracts which undertook to prevent dealers from freely exercising the right to sell.” 250 U.S. at 307— 08, 39 S.Ct. at 468. [12, 13] Through a series of decisions culminating with United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), the Court blurred the seemingly clear line between conduct permitted (Colgate) and proscribed (Dr. Miles) by § 1 of the Sherman Act. The defendant in Parke Davis had announced that it would refuse to sell to wholesalers who sold to retailers who failed to charge the resale prices speci- fied by Parke Davis. Parke Davis effectuated this policy by sup- plying wholesalers with the names of retailers who refused to charge the prices specified by Parke Davis; the wholesalers then had to either stop supplying the offending retailers or face the loss of supplies from Parke Davis. In holding that this scheme violated the Sherman Act the Court reasoned that by [T]Jhus involving the wholesalers to stop the flow of Parke Davis products to the retailers, thereby inducing retailers’ adherence to its suggested retail prices, Parke Davis created a combination with the retailers and the whole- salers to maintain retail prices. ... Although Parke Davis’ originally announced wholesalers’ policy would not under Colgate have violated the Sherman Act if its action there- under was the simple refusal without more to deal with wholesalers who did not observe the Wholesalers’ Net Price Selling Schedule, that entire policy was tainted . . . when Parke Davis used it as the vehicle to gain the wholesalers’ participation in the program to effectuate the retailers’ adherence to the suggested retail prices. .. . 112 362 U.S. at 45-6, 80 S.Ct. at 512-513. The Court thus identi- fied the factors which a plaintiff must establish before a jury can find liability for resale price maintenance under § 1 of the Sherman Act: 1. the announcement of a suggested retail price; 2. procurement of competitors’ assistance in insuring compliance with that price. Since Sweeney has not alleged that Texaco had any announced retail prices it has failed to fulfill the first requirement of Parke Davis.*° [14] Even if I found that announcement of suggested retail prices was not required for a finding of liability under Parke Davis, I would nevertheless have to hold that Sweeney has failed to show that Texaco entered into a combination, as defined by the Parke Davis court. Sweeney has not introduced any evidence from which a jury could reasonably infer that Texaco took “affirmative action” to ensure adherence to some particular re- sale price.** Compare United States v. Parke, Davis & Co., 362 U.S. at 47, 80 S.Ct. 503 (1960) (Court held that when manu- 35 Sweeney has even failed to establish that Texaco had any policy whatsoever on the level of their retail prices. See note 34 supra. 36 Courts have long distinguished between a manufacturer who takes affirmative action to ensure compliance with his pricing policies (unlaw- ful) and a manufacturer who merely announces such a policy (lawful). In Gray v. Shell Oil Co., 469 F.2d 742 (9th Cir. 1972), cert denied, 412 U.S. 943, 93 S.Ct. 2773, 37 L.Ed.2d 403 (1973), the court instructed the jury that the key issue was {W]hether Shell dealers were free to make their own pricing decisions or whether Shell deprived its dealers of their free choice by use of affirmative conduct... . The distinction . . . between ‘coercion’ on the one hand and ‘exposition, persuasion and argument’ on the other, . . . is firmly imbedded in the decisional law on vertical price-fixing.” 469 F.2d at 747-48 (citations and footnotes omitted). 113 facturer takes affirmative action to achieve uniform adherence to a particular price he engages in concerted action and violates § 1 of the Sherman Act). Sweeney has shown only that other retailers complained to Texaco. Like other courts, I find ‘hat such evidence does not permit an inference of concerted action. Westinghouse Electric Corp. v. CX Processing Laboratories, 523 F.2d 668 (9th Cir. 1975); Butera v. Sun Oil Co., Inc., 496 F.2d 434 (1st Cir. 1974); Dart Drug Corp. v. Parke, Davis & Co., 120 U.S.App.D.C. 79, 344 F.2d 173 (1965); Klein vy. American Luggage Works, Inc., 323 F.2d 787 (3d Cir. 1963); Carbon Steel Products Corp. v. Alan Wood Steel Co., 289 F.Supp. 584 (S.D.N.Y. 1968); Fuchs Sugars & Syrups, Inc. v. Amstar Corp., 602 F.2d 1025 (2d Cir. 1979); Carr Electronics Corp. v. Sony Corp. of America, 472 F.Supp. 9 (N.D.Cal.1979). In Westinghouse Electric Corp. v. CX Processing Labora- tories, 523 F.2d 668 (9th Cir. 1975), a retailer sued a manu- facturer when the manufacturer refused to fulfill the terms of a contract which gave the retailer a more favorable price than that available to the retailer’s competitors. The retailer alleged that the maufacturer’s conduct resulted from a combination or con- spiracy to stabilize prices between the manufacturer and the retailer’s competitors. As evidence of this combination the re- tailer showed that its competitors had called the manufacturer to request that the manufacturer give them the same price of- fered to the retailer pursuant to the terms of the contract.*’ The retailer also introduced the testimony of one of its principal owners who had said that in his opinion the conversations be- tween the manufacturer and the other retailers had resulted in an agreement to fix prices. Faced with such meager evidence, which nevertheless exceeds that presented by Sweeney in this 87 The manufacturer had offered the plaintiff a very favorable contract as a means of inducing him to distribute its products rather than those of one of the manufacturer’s competitors. The contract was designed to meet an offer by one of these competitors. 523 F.2d at 671. 114 case,** the district court directed a verdict in favor of the de- fendant. The Court of Appeals for the Ninth Circuit affirmed. In reaching this conclusion the court of appeals examined the case law cited by the retailer, which includes that cited by Sweeney, but found all of those cases distinguishable because In each instance the guilty manufacturer established either an express resale price or a method to prevent resale to either certain customers or within certain territories. Gen- erally, these policies were imposed upon wholesalers or retailers through a well-defined enforcement scheme. 523 F.2d at 674-75, and \estinghouse had established no such price or method. Like Westinghouse, Texaco did neither of these things. 88 Sweeney also introduced the opinion testimony of one James P. Rodden, a former Texaco employee who now works for a Sweeney- related entity. (N.T. 389-506). Rodden testified that “[t]o the best of my knowledge I believe [that Texaco changed Sweeney's hauling allowance] due to the fact of the retailers and the loss of volume that we encountered through that and their complaints to our management. . .” (N.T. 457) (emphasis added). However, Rodden’s testimony related to 1973, three years after the alleged conspiracy took place. (N.T. 421-22). See note 45, infra. Whatever possible relevance that testimony may have had on the alleged 1970 and 1971 conspiracies is negated by the rest of his testimony, for Rodden also testified as follows: By Texaco’s counsel to Mr. Rodden: Q_ Mr. Rodden, it is correct, isn’t it, that you do not have any knowl- edge of any contract or understanding between Texaco and any per- son, partnership or corporation outside of Texaco, the purpose of which was to injure, harm or destroy Sweeney's business? A. No. Q_ And, isn’t it also correct, Mr. Rodden, that you were not aware of any instance where Texaco took any action in its dealings with Sweeney as a result of a contract or understanding between Texaco and any other entity? A Not that I know of, no. Q_ And, Mr. Rodden, as far as you are aware, Texaco did not change or attempt to change Sweeney’s point of supply as a result of anything said by any Texaco retailer, isn’t that correct? A That’s, I gather that would be correct, yes. 115 Indeed, Westinghouse presented a more attractive case for denying the defendant’s motion for a directed verdict than does this case because at least in Westinghouse the court could find that the manufacturer had “discouraged direct competition with one other distributor,” 523 F.2d at 675, and the record in this case does not permit such a finding. (N.T. 379-82, 389-506). There is absolutely no evidence that Texaco announced a sug- gested retail price or price range for Texaco gasoline or that it solicited the aid of other retailers in policing its enforcement. (N.T. 461). Indeed, there is no evidence that Texaco tried to influence the retail price of Texaco gasoline in any manner whatsoever. (N.T. 379-382, 455-461). As the court noted in Carbon Steel, the retailers who complained were simply fullow- ing rational market behavior, and their unsolicited activity can- not serve as the basis for finding §1 liability under even the most favorable reading of Parke Davis. The court’s decision in Butera v. Sun Oil Co., Inc., 496 F.2d 434 (1st Cir. 1974), a case strikingly similar to this one, confirms the wisdom of this conclusion. The plaintiff in Butera was a retailer of defendant Sun Oil’s products. He alleged that a Q_ That is correct? A It’s correct. Q_ Mr. Rodden, are you aware of any instance where Texaco coerced Sweeney or any other Texaco distributor to refrain from dealing with Texaco service stations who engaged in vigorous price competition? A_ No, I’m not aware. Q_ Not aware of any such instance? A No. Q_ Are you aware of any instance where Texaco increased the price of gasoline to Sweeney or to any other distributor as a result of their contract or understanding with anyone outside Texaco? A No. (N.T. 455-461). This testimony makes Sweeney an even weaker case than Westinghouse, where there was no indication that the plaintiff's own witness ever made such categorically absolving statements. Indeed Mr. Sweeney, the president of the plaintiff in the instant case testified that Texaco had never interfered with the way Sweeney marketed gasoline or with the method which Sweeney used to arrive at the retail price of Texaco gasoline. (N.T. 379; 382). See notes 28-29, supra. 116 change in Sun Oil’s method of computing certain allowances prevented him from taking advantage of fluctuations in the wholesale price of gasoline and thus reduced his profit. Although the plaintiff argued that Sun Oil’s action constituted resale price maintenance in violation of § 1 of the Sherman Acct, the district court granted Sun Oil’s motion for summary judgment and the court of appeals affirmed. As the court of appeals explained Sun Oil, like Texaco, had not suggested the resale price of the gasoline it supplied to the plaintiff. The court further reasoned that: [A] producer’s tight control over its wholesale prices does not become resale price maintenance merely because retail outlets to which it sells, being highly competitive and sell- ing at low margins, are sensitive to every change in whole- sale prices. The decision as to what margin to use and when to change it, and consequently what retail price to charge remains Butera’s, and we agree that such economic impact as follows from Sun’s tight control of its own wholesale pricing is not a Sherman Act violation. 496 F.2d at 437-38. Therefore the court held that the plaintiff had failed to show that by changing the method of computing the plaintiff's allowance Sun Oil violated § 1 of the Sherman Act. The facts proven by the plaintiff in Butera closely parallel . those proven by Sweeney. In both cases the plaintiffs adopted a method of operating which employed their supplier’s special al- lowances to increase their profits. Sweeney used the hauling allowance as a subsidy by acquiring stations near Westville and Butera used the volume allowance as a bonus by speculating on the price of gasoline and filling his oversize tank when he thought that due to fluctuations in the price he would get a larger allowance. In both cases the cost of the product to the plaintiffs was increased when the defendant changed the method of calculating the allowance. If the injury to the plaintiff did not 117 suffice to establish a § 1 violation in Butera it cannot suffice here. Butera shows that Colgate survived Parke Davis and that when a manufacturer acts like Texaco, independently and for its own business purposes, it does not violate the Sherman Act. To hold otherwise would be to hold that Texaco had a duty to con- tinue to give Sweeney a hauling allowance solely to provide Sweeney with an advantage over its competitors.** That I cannot do. [15] Sweeney has also argued that in light of the Supreme Court’s decision in Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968), an agreement between Texaco and the complaining retailers can be established merely because the retailer’s complaints helped Texaco effectuate its plan io force Sweeney to raise its prices. Prior to the oral argu- ment on the defendant’s motion for a directed verdict Sweeney cited Fuchs Sugars & Syrups, Inc. v. Amstar Corp., 477 F.Supp. 867 (S.D.N.Y.1978), as the strongest authority for its posi- tion.*° However, just before the oral argument counsel learned that the Court of Appeals for the Second Circuit had reversed the district court in Fuchs, 602 F.2d 1025 (2d Cir. 1979). The plaintiffs in Fuchs were general sugar brokers who sometimes bought sugar from the defendant Amstar. In addition to general brokers, such as plaintiffs, who arranged for sales of 89 As the Westinghouse court noted such a procedure could have ex- posed Texaco to liability under the Robinson-Patman Act in a suit brought by Sweeney’s competitors. 523 F.2d at 676. For a more detailed discussion of this argument see Part VII, infra. * At the conclusion of the first day of trial the court asked counsel for the plaintiff, off the record, what the best authority for his position was. Counsel cited the district court’s opinion in Fuchs as his best authority. (See N.T. 1853 for an on the record discussion of this con- versation). The court then expressed its concern over differences in the facts of Fuchs and Sweeney which seemed to make Fuchs a much stronger case for denial of the defendant's motion for judgment notwith- standing the verdict than was Sweeney. (The standards for deciding motion for directed verdict and judgment notwithstanding the verdict are identical. Neville Chemical Co. v. Union Carbide Corp., 422 F.2d 1205 (3d Cir. 1970)). 118 sugar from Amstar as well as from Amstar’s competitors, Amstar dealt with direct brokers who arranged only for sales of Amstar’s products. It was undisputed that the operation of the general brokers reduced the price of Amstar’s sugar and therefore lowered Amstar’s profit margin. To increase its profit margin Amstar decided to change its system of distribution by ceasing to deal through general brokers. It then gave the general brokers the choice of becoming direct brokers or being terminated. Although some of the former general brokers agreed to become direct brokers the plaintiffs did not. Relying, like Sweeney, on Albrecht, the plaintiffs in Fuchs alleged that Amstar’s actions resulted from a combination viola- tive of § 1 of the Sherman Act. The jury agreed and returned a verdict for the plaintiffs. Since the district court had refused to grant Anistar’s motion for judgment n. o. v., Amstar ap- pealed. The Court of Appeals for the Second Circuit held that the defendant’s conduct did not violate § 1 of the Sherman Act and reversed the district court’s denial of the defendant's motion for judgment n. o. v. My decision in this case follows inexorably from Fuchs. The court of appeals reversed the district court in Fuchs even though the plaintiffs had argued that the “jury . . . could infer that Amstar’s goal in terminating its general brokers was anti- competitive and that the conduct of its general and/or direct brokers materially aided and abetted its accomplishment,” /d. 1031, and that Amstar therefore engaged in a combination or conspiracy. Sweeney could not even make such an argument in this case for Sweeney has not alleged, and indeed could not show, that the complaints of its competitors aided and abetted Texaco’s allegedly anti-competitive scheme. In this case there is simply no one in the position of the brokers in Fuchs who, like the substitute distributor in Albrecht, reaped the benefit of the defendant’s allegedly anti-competitive behavior. Both in Fuchs and in Albrecht third parties entered into agreements which resulted in their receipt of business which might otherwise have gone to the plaintiff. The change in Sweeney’s hauling allowance had no such effect, for Sweeney's gallonage continued to in- 119 crease (Plaintiffs’ Exhibit 109) and Sweeney's distributorship was never given to anyone else. If in Fuchs, where there was an agreement between the defendant and another entity which received business otherwise given to plaintiff the court did not find that the jury could infer a conspiracy in violation of the Sherman Act, I cannot so find in this case, which lacks even that agreement.’ The court of appeals has been unwilling to expand “Albrecht beyond its narrow factual confines,” Harold Friedman. Inc. v. Kroger Co., 581 F.2d 1068, 1074 (3d Cir. 1978), and I believe that it would agree with the Fuchs court and refuse to expand Albrecht to cover the facts of this case. [16] As the Fuchs court realized, the jury’s ability to infer that the defendant had an anticompetitive purpose in taking the action in question is immaterial. As long as Texaco, like Amstar, acted without soliciting the aid of any other entity, as is undisputedly the case here,** its motives are irrelevant. As the Court of Appeals for the District of Columbia has held, To establish the illegality of [an] act under Section 1, it is not enough to prove that [the defendant’s] motivation was that of punishment for discounting or anything else, however reprehensible. Dart Drug Corp. v. Parke, Davis & Co., 120 U.S.App.D.C. 79, 92, 344 F.2d 173, 186 (1965) (footnote omitted). While such motivation may do violence to the policy behind the Sherman Act it does not without more constitute a violation of that act. #1 As in Fuchs, there is no evidence that any other entity knew that Texaco planned to change Sweeney's hauling allowance. Therefore, as in Fuchs, I cannot hold that the jury could infer that any other entity participated in that decision. #2 Sweeney has never alleged that Texaco sought the aid of Sweeney's competitors to enforce its alleged desire to have Sweeney charge higher prices. 120 Id. at 92, 344 F.2d at 186 n. 6.*° House of Materials Inc. v. Simplicity Pattern Co., 298 F.2d 867 (2d Cir. 1962). See Mannington Mills, Inc. v. Congoleum Industries, Inc., 610 F.2d 1059, 1069 (3d Cir. 1979). [17] Neither can I find that the hauling agreement, as revised in 1971 to provide for a hauling allowance equivalent to the Macungie to Pottstown rate (Plaintiffs’ Exhibit 10), was itself an agreement in restraint of trade violative of § 1. Sweeney raised this theory for the first time in its response to Texaco’s motion for a directed verdict. It urged that under the famous footnote 6 in Parke Davis, the jury could find that Sweeney and Texaco entered into an unlawful agreement when Sweeney re- luctantly accepted the change in the hauling allowance.** In further support of this argument Sweeney cites the district court’s opinion in Fuchs, which made passing reference to the possi- bility of establishing such a conspiracy. Fuchs Sugars & Syrups, Inc. v. Amstar Corp., 447 F.Supp. 867, 875 (S.D.N.Y.1978), rev'd 602 F.2d 1025 (2d Cir. 1979). Notably, the court of appeals did not even discuss this theory. Sweeney misapprehends the teachings of footnote 6 in Parke Davis. In Perma Life Mufflers, Inc. v. International Parts 8 Lehrman v. Gulf Oil Corp., 464 F.2d 26 (Sth Cir.), cert. denied. 409 U.S. 1077, 93 S.Ct. 687, 34 L.Ed.2d 665 (1972), does not mandate a contrary result. First, that case involved temporary price allowances, a subject which plaintiffs explicitly withdrew from consideration in this case. (N.T. 1840). Second, unlike Texaco, the defendant in that case had announced suggested retail prices and the court based its decision on that fact. “In footnote 6, the Court stated that, Indeed, if [the large retailer's] resumed adherence to the Parke Davis price scale after the interview between its vice-president and Parke Davis’ assistant branch manager, [p. 510] supra, shows that Parke Davis and [the retailer] entered into a price maintenance agree- ment, express, tacit or implied. such agreement violated the Sherman Act without regard to any wholesalers’ participation. 362 US. at 45, 80 S.Ct. at 512 n. 6. It should be noted that these remarks represent only dicta, since Parke Davis was a case brought by the government. The large retailer to which the court referred was not seek- ing to establish Parke Davis's liability to it on the basis of that agreement. 121 Corp., 392 U.S. 134 (1968), the court expanded on the theory first alluded to in Parke Davis. The plaintiffs in Perma Life, franchisees of Midas muffler shops, had sued the franchisor for alleged violations of § 1 of the Sherman Act. The franchisees charged that certain tying clauses and other restrictive provisions in the franchise agreement constituted unlawful restraints of trade. The franchisor argued that the franchisees had been willing participants in the agreements and that their claims were barred by the doctrine of in pari delicto. The Court, relying on its prior decision in Parke Davis, rejected the defendant's argument and held it liable for violating § 1. Two points, though not articulated in the opinion, are crucial to understand- ing the court’s decision. First, the agreement between the dealer and the franchisor, in so far as it contained tying provisions, was unlawful on its face as a per se violation of § 1. International Salt Co., Inc. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20 (1947). This made it like the agreement alluded to in footnote 6 of the Parke Davis, which in so far as it provided for adherence to predetermined resale prices, would have been unlawful on its face as a per se violation of § 1. Dr. Miles Medical Co. v. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911). See United States v. Socony-Vacuum Oil Co., Inc., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). Second, the Court decided only that the defense of in pari delicto would not apply in an antitrust case. It did not decide that an agreement would violate the Sherman Act merely because it was not as eco- nomically advantageous to one of the parties as he would wish. [18] After understanding these points it is easy to see why the Supreme Court reached the decision it did in Perma Life and why that theory does not help Sweeney establish the exis- tence of an unlawful agreement in this case. In neither Perma Life nor Parke Davis was there any question of the illegality of the agreement. That, however, is the precise issue which I must decide in this case. The Court in those cases was faced with agreements which contained provisions violative of the Sherman Act on their face. I am not. The hauling agreement between 122 Sweeney and Texaco contains nothing which on its face con- stitutes an agreement in restraint of trade. Only if the agreement resulted from a combination or conspiracy in restraint of trade would it violate § 1. Sweeney cannot establish the existence of the combination or conspiracy by merely establishing the exis- tence of an otherwise lawful agreement. Neither Parke Davis nor Perma Life can provide the missing link: the evidence of com- bination or conspiracy. Those cases, together with the district court’s opinion in Fuchs would only prevent Texaco from assert- ing the in pari delicto defense. They do not suffice to prove Sweeney’s case. B. 1971 COMBINATION CONSPIRACY—TERMINA- TION OF SWEENEY’S DISTRIBUTOR AGREEMENT 1. HORIZONTAL AGREEMENT [19-21] Sweeney alleges that the testimony of one James P. Rodden, a former Texaco employee currently employed by a Sweeney enterprise, establishes the existence of a conspiracy be- tween Texaco and other retailers to terminate Sweeney’s distrib- utor agreement.*® At trial I allowed Sweeney to elicit testimony from Rodden on this subject and denied Texaco’s motion to strike. (N.T. 464, 592-96). At oral argument on its motion for a directed verdict Texaco renewed its motion to strike Rodden’s testimony and I again, denied it. I continue to stand by that ruling. That Rodden’s testimony is admissible does not mean that it is admissible for all purposes however. I, like the jury, must consider testimony only for the purposes admitted. In this case Rodden’s testimony of his own opinions, surmises, and hearsay, is admissible only to show Texaco’s alleged motives for terminating Sweeney.** (See N.T. 592-96). However, as the 5 Rodden’s testimony is not relevant to the existence of a conspiracy to reduce Sweeney's hauling allowance. On direct examination Rodden testified that prior to 1973 he was not aware of any discussion regarding the change in Sweeney's hauling allowance. (N.T. 421-22). Even after that time, Rodden was not aware of any occasions on which that was discussed at great length. (N.T. 423). 46] so ruled on several occasions. (See e. g. N.T. 413, 415). 123 court held in Dart Drug Corp. v. Parke, Davis & Co., 120 U.S. App.D.C. 79, 344 F.2d 173 (1965), and recognized in Fuchs Sugars & Syrups, Inc. v. Amstar Corp., 602 F.2d 1025 (2d Cir. 1979), anticompetitive motivation without more, does not vio- late the Sherman Act.*’ See United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919). Rodden’s testimony, while admissible, is so speculative on the issue of the relationship between the dealers’ complaints and Texaco’s actions that no reasonable jury could base a decision on it.** Since I would have had to exclude such evidence from the jury’s consideration on the issue of conspiracy, Venzie Corp. v. United States Mineral Products Co., Inc., 521 F.2d 1309, ‘7 Even if Texaco officials decided to terminate Sweeney because of his pricing practices and discussed the termination amongst themselves, Texaco would not have violated § 1. The plaintiff is not alleging that a corporation can conspire with itself. See note 43 and accompanying text, supra. *8 On cross-examination (by Texaco’s counsel) Rodden testified as follows: Q_ And, am I correct that it was Texaco’s marketing philosophy that Texaco preferred its retailers price to be competitive with other service Stations in their immediate area? A Yes. Q And, it was Texaco’s marketing philosophy that it encouraged interbrand competition? A Yes. Q_ Do you know of any Texaco distributor who became aware of the reasons why Texaco terminated Sweeney, the Sweeney Company's distributor agreement? A They—we—we don’t know the reasons. I don’t know the reasons today. We surmised what they thought the reason was. (Following a colloquy between counsel and the court, the reporter read the question and answer back to the witness). A In the answer which the court reporter has just read back to you, Mr. Rodden, to whom are you referring when you said we surmised? A I would be referring to myself, the marketing reps that were in the Philadelphia district at that time, the marketing supervisors that were in the district at that time, the assistant district manager and the district manager. Q_ All those people surmised the reasons? A Yes, sir. 124 1312 (3d Cir. 1975), Harlem River Consumers Cooperative, Inc. v. Associated Grocers of Harlem, Inc., 408 F.Supp. 1251, 1272 (S.D.N.Y. 1976), I cannot use it as the basis for denying Texaco’s motion for a directed verdict. See International Elec- tion Systems Corp. v. Shoup, 452 F.Supp. 684, 709 (E.D.Pa. 1978), aff'd 595 F.2d 1212 (3d Cir. 1979). As the court held in Harlem River Consumers: [S]peculation and surmise may not support a jury verdict and may not substitute on this motion [for a directed ver- dict] for evidence of some kind that [the defendant] know- ingly participated in any conspiracy which might have existed. 408 F.Supp. at 1272. While the jury could have used Rodden’s testimony to corroborate other evidence of a combination or conspiracy, it could not use it as the sole support for its verdict. Like the plaintiff in Venzie, Sweeney [H]ad the burden of adducing sufficient evidence from which the jury could conclude, on the basis of reasonable inferences and not on mere speculation, [the] defendants’ [actions] were the product of concerted action... Q_ Including yourself? A To the best of my knowledge, I don’t know of anyone of them that knows the fact or was told the fact why it was canceled, why Texaco took legal action. Q And, does that include everyone to whom you spoke about the possible reasons for the termination of Sweeney’s distributor agree- ment? A Yes. Q You haven't left anybody out? A_I believe I haven't, no. (N.T. 462-467). 49 It was the possibility of Sweeney's using Rodden’s testimony as cor- roboration that led me to admit it in the first place. (See N.T. 464—66). I realized the difficulty of proving the existence of a conspiracy and did not wish to put obstacles in Sweeney’s already tortuous path. However, deciding to admit the testimony to give Sweeney the benefit of every arrow in its quiver is different from ruling that an arrow that circles the victim can kill, as Sweeney would have me conclude. 125 521 F.2d at 1312. As the court of appeals reiterated in Colum- bia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chemical Corp., inc., 579 F.2d 20 (3d Cir.), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978), the trial judge may direct a verdict “where such action is necessary to guard against a verdict founded solely on ‘mere speculation.’ ” 579 F.2d at 25. That is precisely what I had to do in this case. Other than Rodden’s testimony Sweeney introduced no evidence with respect to the 1971 conspiracy which it had not already introduced to prove the existence of the 1970 conspir- acy. It follows that given the inability of using Rodden’s testi- mony to establish the existence of a conspiracy to terminate Sweeney in 1971, I must find that for the reasons stated in Part V A of this opinion, with respect to the 1970 conspiracy, Sweeney has failed to produce sufficient evidence to allow the jury to conclude that Texaco entered into a combination or con- spiracy to terminate Sweeney’s distributor agreement in 1971. 2. VERTICAL AGREEMENT [22] Sweeney has also failed to introduce any additional evidence with respect to the existence of a vertical conspiracy in 1971. Indeed, with respect to this claim Sweeney has introduced evidence which makes the case so like Fuchs that my decision in this case follows from the court of appeals’ decision in that case as inevitably as night follows day. In Fuchs the court of appeals thought it significant that the decision to terminate the general brokers “was a closely guarded secret within the Amstar cor- poration ....” 602 F.2d at 1031. Likewise, according to Rod- den, Sweeney’s own witness, the decision to terminate Sweeney was a closely guarded secret within Texaco, and those involved in reaching it were forbidden to discuss it with anyone outside Texaco. (N.T. 462-464). Moreover, Rodden testified that he did not know of anyone who had violated that directive (N.T. 463) or of any distributor who became aware of the reasons for the termination. (N.T. 464). By further contrast to Fuchs, where Amstar’s decision ma- terially affected other general brokers, Texaco’s decision to 126 terminate Sweeney had no effect on the marketing policies of other distributors. (N.T. 467-468). Indeed, Rodden testified that he did not know of “any instance where Texaco coerced Sweeney or any other Texaco distributor to refrain from dealing with Texaco service stations who engaged in vigorous price com- petition.” (N.T. 461). Since the facts of this case are even more compelling than those in Fuchs, I have decided to follow the court of appeals’ decision in that case. This decision is supported by sound policy. Although we must give a plaintiff considerable latitude in proving his case due to the difficulties inherent in proving the existence of a conspir- acy, we should not do so at the expense of penalizing a defendant who, under current law, has the right to unilaterally alter his practices as he sees fit. See United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919); Venzie Corp. v. United States Mineral Products Co., Inc., 521 F.2d 1309, 1318 (3d Cir. 1975); George W. Warner & Co. v. Black & Decker Mfg. Co., 277 F.2d 787 (2d Cir. 1960). As Professor Areeda has noted, “Once we recognize, however, that many cut-off dealers will harass their former suppliers with treble damage suits we might hesitate to scrutinize too closely the ambiguous refusal to sell that is not clearly employed to attain an end that could not lawfully be attained by direct agreement.” Areeda Antitrust Analysis, 560 (1974). The Court of Appeals for the Third Circuit has refused to so emasculate Colgate. In the case at bar, I have concluded after close scrutiny that the facts proven would not allow a jury to find that Texaco entered into a combination or conspiracy in violation of § | of the Sherman Act. VI. SWEENEY’S CLAIM UNDER § 2 OF THE SHERMAN ACT Sweeney had also claimed that Texaco conspired and at- tempted to monopolize the market in Texaco gasoline in viola- 127 tion of § 2 of the Sherman Act. °° Sweeney has failed to produce any evidence from which a jury could find that Texaco gasoline constitutes a product market for § 2 purposes.*' Therefore, I directed a verdict in favor of Texaco on both of Sweeney’s § 2 claims. A. ATTEMPT TO MONOPOLIZE [23] To establish a claim of monopolization or attempted monopolization the plaintiff must show that the defendant in- tended to acquire or maintain power in a relevant market, that it sought to do this by engaging in exclusionary practices, and in the case of attempt, that it had a dangerous probability of suc- ceeding.” American Tobacco Co. v. United States, 328 U.S. °° Section 2 of the Sherman Act imposes liability upon Every person who shall monopolize, or attempt to monopolize, or com- bine or conspire with any other person or persons, to monopolize any part of trade or commerce among the several States, i USL. § 2. 51 By letter of May 25, 1979, Sweeney agreed that to succeed on its § 2 claim the court must determine that Texaco gasoline is the relevant market. In this facet of the case Sweeney is not alleging that Texaco attempted to monopolize the market in gasoline generally or that Texaco conspired with other gasoline producers to do so. (See N.T. 81-84). 52 In Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338, 1348 n. 17 (3d Cir. 1975), the court of appeals held that to establish a claim of attempted monopolization a plaintiff had to show that the defendant pos- sessed sufficient market power to come dangerously close to success. In doing this the court relied on the Supreme Court's opinion in Swift and Company v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518 (1905), and declined to follow the Court of Appeals for the Ninth Cir- cuit which had held that a plaintiff could establish an attempt to monop- olize in violation of § 2 without first establishing that the defendant con- trolled a particular share of the relevant market. Greyhound Computer Corp. v. International Business Machines, 559 F.2d 488, 504 (9th Cir. 1977), cert. denied, 434 U.S. 1040, 98 S.Ct. 782, 54 L.Ed.2d 790 (1978); Lessig v. Tidewater Oil Co., 327 F.2d 459, 474-75 (9th Cir.), cert. denied, 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046 (1964). Cf. Mogul v. General Motors Corp., 391 F.Supp. 1305 (E£.D.Pa. 1975), affd 527 F.2d 645 (3d Cir. 1976) (court noted split of authority on this issue but found that it did not need to resolve it). 128 781, 785, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946); Lorain Jour- nal Co. v. United States, 342 U.S. 143, 153, 72 S.Ct. 181, 96 L.Ed. 162 (1951); Swift and Company v. United States, 196 U.S. 375, 396, 25 S.Ct. 276, 49 L.Ed. 518 (1905); Coleman Motor Corp. v. Chrysler Corp., 525 F.2d 1338, 1348, (3d Cir. 1975); Telex Corp. v. International Business Machines Corp., 510 F.2d 894 (10th Cir.), cert. dismissed, 423 U.S. 802, 96 S.Ct. 8, 46 L.Ed.2d 244 (1975). [24] Sweeney has not even established the first element of a § 2 violation. Although it alleged that Texaco gasoline com- prises a separate market which Texaco attempted to monopolize, it has failed to introduce any evidence on which a reasonable jury could base a decision in agreement with this contention. [25] Defining the boundary of the relevant product mar- ket is the first step in determining whether a defendant has vio- lated § 2. United States v. Grinnell Corp., 384 U.S. 563, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966); United States v. E. 1. DuPont & Co., 351 US. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). Without such a determination it would be impossible to ascer- tain whether a defendant has or has attempted to acquire a monopoly. The problem of defining the market in which the defendant is accused of having or having attempted to obtain a monopoly is rarely an easy one to solve. Nonetheless courts have established some guidelines to aid in its resolution. In United States v. DuPont & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956), the Court stated that: In considering what is the relevant market for determining the control of price and competition, no more definite rule can be declared than that commodities reasonably inter- changeable by consumers for the same purposes make up that ‘part of the trade of commerce,’ monopolization of which may be illegal. 351 U.S. 395, 76 S.Ct. at 1007. As the court of appeals ex- plained in Columbia Metal Culvert Co., Inc. v. Kaiser Alumi- num & Chemical Corp., 579 F.2d 20 (3d Cir. 1978), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978), 129 The ‘monopoly’ condemned by § 2 of the Sherman Act inheres in ‘the power to control prices or exclude com- petition.’ To the extent that competition from related pro- ducts limits the market power of an entity with a dominant position in one product, such an entity is less likely to be found to hold ‘monopoly’ power forbidden by law. This is so because the ongoing competition from other products guards against the ability of the dominant entity to increase prices and makes exclusionary tactics by such a party fruit- less, impossible or unbearably expensive. Thus, in resolving the proportion of the ‘market’ controlled as a prelude to an examination of the extent of a firm’s power to control prices or exclude competition, the courts look to the range of ‘commodities reasonably interchangeable by consumers for the same purposes.’ 579 F.2d at 26, quoting United States v. E. 1. DuPont & Co., 351 U.S. 377, 391, 395, 76 S.Ct. 994, 100 L.Ed. 1264 (1956) (footnotes omitted). Looking to the range of commodities “rea- sonably interchangeable by consumers for the same purposes” as Texaco gasoline leads to the inescapable conclusion that Texaco gasoline does not represent a separate market for purposes of § 2. By Sweeney’s own admission gasoline is a fungible commodity. Sweeney unhesitatingly bought gasoline from other refiners to sell to its stations. (N.T. 213-225). Through the testimony of its officers Sweeney also admitted that it had to compete with retail stations selling Texaco and other branded as well as unbranded gasoline and with dis- tributors who sold Texaco and other branded as well as un- branded gasoline.** (N.T. 364-65, 476, 574-79). Moreover, Sweeney introduced evidence to show that the price at which it sold Texaco gasoline depended on the price at °3In Mullis v. Arco Petroleum Corp., 502 F.2d 290, 296 n. 17 (7th Cir. 1974), discussed infra, the court found these factors significant. In that case, as in this case, the defendant oil company provided “TVA’s” to help dealers faced with competition from other stations. Although Sweeney did not seek damages as a result of disputes over TVA’s, (N.T. 81-84) notation of their existence is, as in Mullis, appropriate. 130 which other distributors and retailers sold their gasoline. (/d.) Had Texaco gasoline been a separate product market, as Swee- ney claims, changes in the price of Texaco gasoline would not have resulted in shifts in customer preference. Yet, according to the uncontradicted testimony of Sweeney’s own witness, that is precisely what they feared and what happened.” (N.T. 476, 536-538). As the Court noted in Dupont, Price and competition are so intimately entwined that any discussion of theory must treat them as onc. It is incon- ceivable that price could be controlled without power over competition or vice versa. 351 U.S. at 392, 76 S.Ct. at 1005. Since it is clear that Texaco did not have control over price it could not have had control over competition. Thus, Sweeney’s evidence permits only one conclusion: Texaco gasoline was easily interchangeable with other gasoline and did not constitute a separate product market. Justice, then Judge, Stevens, reached the same conclusion in a very similar case, Mullis v. Arco Petroleum Corp., 502 F.2d 290 (7th Cir. 1974). The plaintiff in Mullis was a distributor of the defendant’s products. After Arco terminated his distribu- tor agreement the plaintiff brought an action alleging inter alia that Arco had violated § 2 of the Sherman Act. As in this case, the plaintiff needed to establish that the Arco products formed the market which the defendant sought to monopolize. The court, however, refused to find that Arco gasoline was the relevant market and reversed the district court’s issuance of an order enjoining the defendant from refusing to supply the plaintiff with Arco products.** 502 F.2d at 296-97. °* See note 70, infra. Neither Sweeney nor Texaco introduced expert testimony on this issue of cross-elasticity of demand for Texaco gasoline. The jury would have had to evaluate the testimony of Sweeney's lay witnesses to arrive at a decision, and I must decide whether this testi- mony taken as a whole would support a verdict in Sweeney's favor. It is for that reason that I must analyze the inferences which reasonable people could have drawn from the evidence presented. 55 Sweeney claims Mullis has no application to this case because that case arose out of the 1973 gasoline shortage. Sweeney argues that the 131 Like Sweeney the plaintiff in Mullis had argued that its inability to secure an alternative source of supply compelled the conclusion that the relevant market included only the defend- ant’s products.** The court disagreed. It reasoned that, The fact that an injury to a particular competitor may be unusually severe is not a justification for adopting a market definition which only considers the particular product line which he has previously sold or purchased. For in Sherman Act litigation we must adhere to the admonition that the statute is concerned ‘with the pro- tection of competition, not competitors.’ And whether the competition is more intense on the seller’s or the buyer’s side of the market, we may not arbitrarily segregate one brand from equally acceptable substitutes in order to pro- tect a particular competitor from injury. market definition decided therein could have no bearing on a case such as this, where the effects of a shortage were not in issue. That argument ignores the basis of the court’s opinion, however. Before deciding the issue of the effect of the shortage, the court was at pains to point out that it was, [F]irst appropriate to identify the reasons why plaintiff's § 2 claim would be manifestly insufficient if there had been no shortage, and then to consider the relevance of the shortage. 502 F.2d at 295. Only after deciding that Arco gasoline did not consti- tute a relevant market under normal circumstances did the court go on to consider the effect of the shortage. The court nonetheless concluded that an energy shortage with the attendant regulatory controls imposed on oil companies would not justify a redefinition of the relevant market. 502 F.2d at 298. On the contrary, insofar as a shortage increased the “cross-elasticity of demand” the relevant market would tend to increase, not decrease in size. Id. Consumers Oil Co. v. Continental Oil Co., Inc., 1979-1 Trade Cases € 62,596 at 77,434-35 (D.Minn.1979). I will not discuss the effects of a shortage in more detail because S»veeney in its Memorandum in Response to Texaco’s Motion for a Directed Verdict stated that “plaintiff has not relied on the fact of shortage in any way concerning its Section 2 count... .” at 11. 56 In considering this argument the Mullis court first evaluated the evi- dence in the record and then decided whether the existence of an energy crisis would affect that analysis. 502 F.2d at 297. 132 502 F.2d at 298-99, quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962) (foot- note omitted; emphasis in original). Yet such arbitrary segrega- tion is precisely what Sweeney seeks. Like the court in South End Oil Co. v. Texaco Inc., 237 F.Supp. 650 (N.D.IIl. 1965), I cannot hold that a jury could find that Texaco gasoline con- stitutes a distinct product market. In South End the plaintiff, a Texaco distributor, brought an action against Texaco alleging a violation of § 2 of the Sherman Act. To succeed on its claim the plaintiff had to establish that Texaco motor oil formed a separate market. The court granted summary judgment for the defendant and held that As a legal proposition, plaintiff's monopolization argument cannot be sustained. The product market cannot be restricted in the manner in which [plaintiff] suggests, . . . Where commodities are competitive and reasonably interchangeable, the relevant market cannot be confined to the products of one manufacturer. 237 F.Supp. at 655-56 (citation omitted). In this case, as in South End, Sweeney’s witnesses testified that Texaco gasoline was competitive and interchangeable with other gasoline. In the absence of any evidence of the uniqueness of Texaco gas- oline the jury could not have concluded that, contrary to the teachings of Mullis and South End Oil, Texaco gasoline repre- sents a separate product market. [26] Sweeney has also argued that the existence of the Texaco trademark provides the necessary evidence of the exist- ence of a separate market. This contention is without merit anc has been repeatedly rejected. United States v. E. 1. DuPont & Co., 351 U.S. at 393, 76 S.Ct. 994; Fount-Wip, Inc. v. Reddi- Wip, Inc., 568 F.2d 1296, 1301 (9th Cir. 1978); Merit Motors, Inc. v. Chrysler Corp., 417 F.Supp. 263, 269 (D.D.C.1976), affd, 187 U.S.App.D.C. 11, 569 F.2d 666 (1977); Mogul v. General Motors Corp., 391 F.Supp. 1305, 1313 (E.D.Pa. 1975), aff'd, 527 F.2d 645 (3d Cir. 1976); ALW, Inc. v. Unit- 133 ed Air Lines, Inc., 510 F.2d 52, 56 (9th Cir. 1975); Bushie v. Stenocord Corp., 460 F.2d 116, 120 (9th Cir. 1972); Mt. Lebanon Motors, Inc. v. Chrysler Corp., 283 F.Supp. 453 (W.D.Pa. 1968), aff'd, 417 F.2d 622 (3d Cir. 1969); Packard Motor Car Co. v. Webster Motor Car Co., 100 U.S.App.D.C. 161, 163, 243 F.2d 418, 420, cert. denied, 355 U.S. 822, 78 S.Ct. 29, 2 L.Ed.2d 38 (1957); Wales Home Remodeling Co.. Inc. v. Alside Aluminum Corp., 443 F.Supp. 908 (E.D.Wis. 1978); Diehl & Sons, Inc. v. International Harvester Co., 426 F.Supp. 110, 120-22 (E.D.N.Y.1976). See Columbia Metal Culvert, Inc. v. Kaiser Aluminum & Chemical Corp., 579 F.2d 20, 27, n.11 (3d Cir.), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978). As the Court noted in DuPont, [OJne can theorize that we have monopolistic compe- tition in every nonstandardized commodity with each manu- facturer having power over the price and production of his own product. However, this power that, let us say, auto- mobile or soft-drink manufacturers have over their trade- marked products is not the power that makes an illegal monopoly. Illegal power must be appraised in terms of the competitive market for the product. 351 U.S. at 393, 76 S.Ct. at 1006 (footnotes omitted). The Court of Appeals for the Third Circuit has followed these teachings. In Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chemical Corp., 579 F.2d 20 (3d Cir.), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978), it noted that The § 2 market definition looks to the existence of com- petitors as evidence of countervailing power which would preclude monopolization. . . . stifling intra-brand com- petition may violate § 1, while ‘monopoly’ over a given brand would clearly not run afoul of § 2. 579 F.2d at 27 n.11 (citation omitted) (emphasis added). In the same vein, another court has remarked that A manufacturer has a ‘natural monopoly over his 134 own products, especially when the products are sold under trademark. . . .” Industrial Building Materials, Inc. v. Interchemical Corp., 437 F.2d 1336, 1344 (9th Cir. 1970). See United States v. E. 1. DuPont de Nemours & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). Unless the manufacturer used his natural monopoly to gain contro! of the relevant market in which his products com- pete, the antitrust laws are not violated. Bushie v. Stenocord Corp., 460 F.2d at 120 (9th Cir. 1972). In light of these holdings and in the absence of any evi- dence to the contrary I have no choice but to reject Sweeney’s argument on the relevance of Texaco’s trademark. Indeed, other courts have gone even further and taken judicial notice that the relevant product market cannot be limited to the defendant’s trademark. Mogul v. General Motors Corp., 391 F.Supp. 1305, 1313 (E.D.Pa.1975), aff'd, 527 F.2d 645 (3d Cir. 1976). B. CONSPIRACY TO MONOPOLIZE [27] The evidence introduced to establish a conspiracy to violate § 2 is identical to that which Sweeney introduced to establish a conspiracy to violate § 1, (See Part V, supra). Just as that evidence did not suffice to permit the jury to find that such a conspiracy existed, it cannot suffice here.** Absent evi- ** In Mogul the court held that Cadillac, a brand which was alleged to be specifically associated with luxury automobiles, did not represent a separate market because it was interchangeable with other luxury auto- mobiles as well as less expensive automobiles. Furthermore, the court noted that the Cadillac division of the defendant did not have the power to fix prices. It has not even been contended in this case that Texaco has the power to fix retail gasoline prices and my decision follows a fortiori trom Mogul, Clearly, Texaco gasoline is more interchangeable with other gasoline than Cadillac automobiles are with other automo- biles. I could almost take judicial notice of the fact that it would be easier to persuade regular Texaco customers to buy, for example, Exxon instead of Texaco gasoline than to persuade a regular Cadillac customer to drive a Chevette instead of a Cadillac. Tronically, what little evidence Sweeney introduced on this issue sup- ports Texaco’s position. (N.T. 462). 135 dence of a conspiracy Sweeney’s §2 claims must fail. See Mannington Mills, Inc. v. Congoleum Industries, Inc., 610 F.2d 1059, 1070 (3d Cir. 1979). Moreover, even if Sweeney succeeded in establishing the existence of a conspiracy, his § 2 claim would fail for failure to show that Texaco gasoline constituted a separate market, and without such a showing no violation of § 2 can occur. United States v. Grinnell Corp., 384 U.S. 563, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966); United States v. E. I. DuPont & Co., 351 U.S, 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). (See Part VI A, supra). VII. SWEENEY’S CLAIM UNDER § 2 OF THE ROBINSON-PATMAN ACT Sweeney claims that by changing its hauling allowance to provide for the Macungie to Pottstown rate, Texaco discrimi- nated against it in violation of the Robinson-Patman Act." It seeks damages equal to the difference between the Westville to Pottstown and the Macungie to Pottstown hauling allowance." However, neither Sweeney nor any other Robinson-Patman plaintiff can recover damages on such a theory. [28-32] To succeed on a Robinson-Patman claim a plain- 5° Section 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a), pro- vides in part, It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such dis- crimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States . . . and where the effect of such discrimination may be substantially to lessen com- petition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: ... 60 Sweeney se*ms to have asserted this as its measure of damages in its latest submission to the court. Thus, in its Response to Defendant Texaco, Inc.’s Motion for a Directed Verdict Sweeney states that, The hauling allowance differential, that is, between Sweeney's old rate and new rate, is greater than the difference between his hauling allowance and of [sic] his competitors’ hauling allowances, However, since Sweeney was forced to absorb the loss in order to meet the com- 136 tiff must prove at least four things. First, he must prove that there was a difference in the price charged him and his com- petitors for a particular item at a particular time.’’ Second he petition, it accurately includes the discriminated amount. .. . Plaintiff has demonstrated damage which includes the differential between the favored wholesalers price and his price. Therefore, he should be entitled to recover the damages based on the difference. At 19-20 (emphasis added). It is extremely unclear from this language which difference Sweeney is seeking damages for. However, since Sweeney refers to a sum of damages which includes another, I assume that it seeks damages based on the larger sum. The issue is complicated by Sweeney's representation on the first day of trial that it was changing its damage theory and now claimed damages for the difference between its hauling allowance and that of its competitors. (N.T. 63-81, 332- 340). This unnecessary equivocation demonstrates some of the difficulties presented by plaintiff's lack of certainty about the content of its allega- tions. However, it is irrelevant to the outcome of the case, since Sweeney has failed to provide sufficient evidence to sustain an award of damages based on either measure. See note 66, infra. *! An issue that arises in the context of this requirement is the appro- priate definition of price. Thus, functional discounts do not comprise part of the price for Robinson-Patman Act purposes, and differences in them ure not torbidden by § 2(a). McCaskill v. Texaco Inc., 351 F.Supp. 1332, 1340 (S.D.Ala.1972), aff'd, 486 F.2d 1400 (Sth Cir. 1973); Refrigera- tion Engineering Corp. v. Frick Co.. 370 F.Supp. 702, 713 (W.D.Tex. 1974); Report of The Attorney General's Committee to Study the Anti- trust Laws, 202-204 (1955). Texaco has claimed that the hauling allow- ance is a functional discount because it represents a payment for services rendered. Since it is undisputed that excluding the hauling allowance all Texaco distributors in Pennsylvania and New Jersey pay the same price per gallon for Texaco gasoline, Texaco claims that Sweeney has failed to show a difference in price. On the other hand, Sweeney claims that the hauling allowance is not a functional discount because it often bears no relationship to the distance over which the gasoline is hauled. Since there was evidence of instances where Texaco knew of distributors who were not hauling their gasoline to the place upon which their allowance was based, I agree with [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_IA40385007_1401%3A1. Public record. Not legal advice.