# Petition for Writ of Certiorari — Northern Oil Co. v. Standard Oil Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0264%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1985 - **Citation:** 474 U.S. 821 ## Text ' “¢ Sunreme Court, US. @): [MAST LED Olen 's 4 Ke as-195@ ! MAY 24 1965 ete) ' CLERK ALEXANDER LC STEVAS. ee Ps Iu the Supreme Court of the Anited States OCTOBER TERM, 1984 No. NorTHERN Or Company, INc., Bray Om Company, INc., NORTHERN TERMINALS, INC., AND Dana S. Bray Petitioners Vv. STANDARD Or, COMPANY OF CALIFORNIA AND CHEVRON U.S.A. INc. PETITION FOR A WRIT OF CERTIORARI TO THE TEMPORARY EMERGENCY COURT OF APPEALS OF THE UNITED STATES JouNn P. Monte, Esq. Counsel of Record RicHarp E, Davis, Esa. Attorney for Petitioners 30 Washington St., Box 666 Barre, Vermont 05641 (802) 476-3123 May 23, 1985 —— wee EERE + OE EERE ern QUESTIONS PRESENTED 1. Whether the TECA's ruling that a cause of action for overcharges accrues at thetimeof the original misclassifi- cacion and not at the time of contract is contrary to public policy embodied in the Economic Stabilization Act. 2. Whether a release is void as against public policy where such release was ob- tained by deceptive practices and econo- mic coercion in circumvention of the Emerg- ency Petroleum Allocation Act and supporting regulations. 3. Whether the purported federal common law principle that "a misrepresentation made during business aegotiations does not constitute an actionable fraud claim if the deceived party had access to the under- lying truth" is consistent with the control- ling case of Shappirio v. Goldberg, 192 U.S. 232 (1904), 4. Whether Congressional intent, public policy and the decisions of this Court, permit the rejection of Vermont law as the federal common law of fraud applicable to a release of federal statutory claims. 5. Whether the Erie doctrine allows the TECA to apply federal common law to a release of federal statutory claims. TABLE OF CONTENTS PAGE(S) TABU OF AUTMORITIES 6. + hee eee. iii I cos, sits kb cee ws we es 1 STATEMENT OF JURISDICTION .......... l FEDERAL STATUTES AND REGULATIONS Se ee ee ae ee 2 SS dee ae ee ee eee 3 REASONS FOR GRANTING THE PETITION .. 20 I. The TECA's Ruling That A Claim Of Overcharge Accrues At The Time Of The Original Misclassi- fication And Not At The Time Of Contract, Is Contrary To Public Policy se ee ge ee i a ee 20 II. A Release Is Void As Against Public Policy If It Is Obtained By Deceptive Practices And Economic Coercion In Circumven- tion Of The EPAA oS ie eo ee oe ae Oe ee ee i 22 III. The TECA Has Decided An Important Federal Common Law Fraud Question In A Way Which Conflicts With Shappirio v. Goldberg, 192 U.S. 232 (1904), With Other Federal Courts of Appeals, And With The Trend Of Modern Law. -----:-:-:-:-- 29 PAGE(S) IV. Congressional Intent, Public Policy, And The Decisions Of This Court Required The TECA To Determine The Validity And Scope Of The 1975 Release According To Vermont Law :::::: 32 V. The Erie Doctrine Required The TECA To Apply Vermont Law To A Release Of A Pendent State Fraud Claim «+++ -eeeee eee eeeees 60 es ce ee AEE OLE SD 62 1-212 APPENDIX «ccc cccrsrssercrersreserens ii TABLE OF AUTHORITIES CASES PAGE(S) Aaron Ferer & Sons, Ltd. v. Chase ils tae a ee rrr eee 30 734. F.2@ Lid (Za Cir. , 1984) : sie : 4 4s Air Transport Association of America: 44,45,46 2 FEA 30502 (1975) Board of Commissioners v. United States, eee D hE ORUR ON a eke ee Rane me DO ate » hub owas 54 308 U.S. 64 (1939) City of Milwaukee v. Illinois, -::::-: 58 101 S.Ct. 1784 (1981) Crompton v. Beedle & Thomas, :::::::: 35,56 83 Vt. 287 (1910) Dice v. Akron, C.&Y.R. Co.,---::++:+:- 32, 30; 2a: 342 U.S. 359 (1952) 61 53,61 Erie Railroad Company v. Tompkins,::: 304 U.S. 64 (1938) Frigitemp Corp. v. Financial Dynamics Fund, inc. , ee oe a ee ee ee ee ee ee 30,32,36 924 F.2d 275 (2d Cir., 1975) Grumman Allied Industries, Inc. v. Rohr Industries, Inc.,--------++--+ee--. 30,37, 38, 748 F.2d 275 (2d Cir., 1984) 30 Holdsworth v. Strong,:-------+-+-++++-- 36 545 F.2d 687 (10th Cir., 1976) Ingram Corp. v. J. Ray McDermott, ... 27,29 698 F.2d 1295 (5th Cir., 1983) SG PAGE(S) Korn v. Franchard Corp.,----++++++--: 22 388 F. Supp. 1326 (S.D.N.Y. 1975) Larkin, et | aa a ae a ee ee i 44,45 4 FEA 89514 (1976) Lunnie v. Gadapee, 2 10 C.F.R. $205. 202 -----+-s-.e5eee. 2,26 10 C.F.R. €210.62(c) -----++-.-+5.. 2,26 10 GPM. SPORTS «occ ves ee cwcenss 2,42 10 C.F.R. §205.201(e) -----+seeeeee- 2,43 OTHER AUTHORITIES PAGE(S) 33 A.L.R. 853 (Annotation: Fraud - Matters of Public Record) -:::-::: 33 Prosser, Law of Torts, 4th ed. SLOZ crc ttt teeter e cece we eees 34 Restatement 2d, Torts, §540 :::::: 36 Restatement 2d, Torts, §541 -::::: 36 Restatement 2d, Torts, §541, Comment (a) i oe ae ee Oe a es a ee a 34 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction §4514 --++++ee ese eee 53, 54,59 vii IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1984 NORTHERN OIL COMPANY, INC., BRAY OIL COMPANY, INC., NORTHERN TERMINALS, INC., and DANA S. BRAY PETITIONERS V STANDARD OIL COMPANY OF CALIFORNIA, and CHEVRON U.S.A., INC. OP NIONS BELOW The Opinion of the Emergency Court of Appeals (App. 1-22) is unreported to date. The opinions of the district court (App. 23- 187) are unreported. JURISDICTION The judgment of the Temporary Emergency Court of Appeals (App. 1) was entered on March 26, 1985 and a petition for rehearing 1 and suggestion for rehearing En Banc was denied on April 24, 1985 (App. 22). The jurisdiction of this Court is invoked under 28 U.S.C. §1254(1). FEDERAL STATUTES AND REGULATIONS INVOLVED Economic Stabilization Act, §210(a), (b), (c) 12 U.S.C. §1904 note (1980 Supp.) Emergency Petroleum Allocation Act 15 U.S.C. $753(b), Ci) , €2) Freedom of Information Act 5 U.8.¢.8. $3320) 4/) Price Rule (Refiners) 10 C.7.R.. $242.08 G08), C43, €2), GC) Violations 10 C.F.R. §205.202 Normal Business Practices 10 C.F.R. §210.62(c) Production or Disclosure Prohibited 10 €.¥.8. $262.22 Confidential Information 10 C.F.R. §205.291(e) STATEMEN7’ l. Background For 25 years before the enactment of the Economic Stabilization Act (ESA) in 1970, Bray companies (petitioners) were branded wholesale distributors of Chevron's products. These products were marketed by Bray companies in up-state New York and through- out Vermont. The heating oil (middle distillates) supply contracts historically required Chevron to bear all transportation costs. Bray companies were also granted discounts off the prices posted at Albany, New York and Burlington, Vermont. Middle distillates were transported from Chevron's New Jersey plant to Bray's terminals by barge. Because the waterways freeze in winter months, all deliveries were required to be made by November 15. 3 When ESA was enacted in 1970, the parties were operating under contracts entered into in 1968, which were due to expire on May 2h, Sere In 1972, the Bray companies were Chevron's largest wholesale distributors of middle distillates in the northeast and one of its largest gasoline distributors. The price of heating oils was frozen in 1972, but Chevron decided it wanted more profits from the Bray contracts. Consequently, Chevron gave written notice to Dana Siay that unless Bray companies agreed to buy product at the New York harbor price, supply of all products would terminate. Chevron was well aware Bray companies had no other source of supply due to the critical nationwide shortage of petroleum products. Bray companies resisted Chevron's "proposal" because it substantially increased the price of fuel oil by shifting transportation costs and eliminating customary discounts. May 3l came and went without any new contracts. Finally, on July 11, 1973, Mr. Pfefferkorn of Chevron unexpectedly flew to Burlington and insisted that predrafted contracts be signed or all shipments of product would immediately cease. Chevron knew that the Cost of Living Council was preparing to fix a freeze date of either May 15 or June 13, 1973: Bray companies were totally unaware of this. The July, 1973 contracts contained a retro- active starting date "as of May 1, 1973". Dana Bray pointed out that the prior contract had not expired until May 31, 1973, and asked for an explanation. Mr. Pfefferkorn said this date was selected so that all customer contracts would commence on May l. 5 This statement was false and Bray companies relied upon it in signing the new contracts. (App. 134-136 ) Bray companies did not discover the truth until 1978. The price regulations in effect at all relevant times required Chevron to classify its customers on the basis of volume, location, method of delivery and terms of sale. Chevron knew these criteria established Bray companies were in a class by themselves. To circumvent these regulations, Chevron placed Bray in its so-called New York Harbor Barge buyer class. The mandatory provisions of the Emergency Petroleum Allocation Act (EPAA) were in effect when the 1974 supply contracts were signed. The only major difference between the 1973 and 1974 contracts was a change in credit terms. This change removed Bray companies from consignment and required payment for product on a fixed time schedule. 6 In October, 1974, the Federal Energy Administration (FEA) learned of this credit change and issued to Chevron a Notice of Probable Violation (NOPV). (App. 208-210 ). The FEA did not furnish a copy of its NOPV to Bray Oil. Bray companies were not parties to this proceeding, but became aware of it when the FEA requested price and credit information concerning the 1973 and 1974 supply contracts. The FEA also advised Bray companies to resume payment on a consignment basis. Chevron did nothing about Bray companies’ return to consignment until June of 1975 when Chevron learned the NOPV was to be rescinded by the FEA on “technical grounds". Chevron then notified Dana Bray it would not supply product except on a cash before delivery (C.B.D.) basis and that it would not restore Bray companies to consignment unless it was given a general release. 7 Chevron's attorney, Matthew Fitzgibbon, then informed Attorney O'Brien, who represented Bray companies, that the FEA "might take until July 15 to come up with the decision". On June 30, 1975, Attorney Fitzgibbon, along with Chevron employees Kaiser, Pfefferkorn and Martin, held a telephone conference with William Costello of the FEA. Costello informed Chevron that he had re- commended rescission of the NOPV because the NOPV contained the "incorrect base period" as it was presently worded. Mr. Costello refused to give Chevron a "clean bill of health" despite Chevron's request, Chevron warning the FEA that the agency would have a bigger problem this fall and winter because of the "effects on third parties". Chevron, on July 10, 1975, demanded a general release as a condition to entering a new supply contract. Five days later, 8 Chevron sent a letter which once more demanded a release and went on to state: Although we continue to be advised by FEA that the matter is being brought to a conclusion, we still have received no formal advice as previously mentioned to Mr. O'Brien and to you. pies of this letter were sent to State New York and Vermont Energy offices, and to the FEA offices in Boston and New York. On July 28, 1975, Chevron received the FEA's formal written notice of rescission of the NOPV. (App. 211) This letter stated the rescission was ''not dispositive of the credit terms in effect on May 15, 1973". The next day, Mr. Pfefferkorn called Mr. Costello of the FEA to discuss the meaning of the rescission letter. Mr. Pfefferkorn learned the words "not dispositive" meant "not the final word as to what credit terms actuaily were" and that (1) it was the FEA's opinion no contract existed as of May 1, 1973; 9 and that (2) "FEA feels May 15, 1973 price still before them" and (3) the FEA would continue the investigation as soon as that agency had manpower available. Chevron waited until August 28, 1975 to inform Bray companies by letter that the NOPV had been "formally rescinded". This letter contained nothing which had not already been said in the July 15th letter except the following passage: We believe you are familiar with the FEA's NOPV of October 25, 1974 directed to Chevron but you may not be aware that FEA has formally rescinded their NOPV of that date. With the past-due account in the amount of $3,500,000.00 and also lack of current financial information, we regret to advise you that we cannot supply you with middle distillate products on extended credit terms unless your account is brought to a current status and unless we can satisfy ourselves on the future credit reliability of your company. Chevron did not send copies of this letter to the FEA as it had done with previous letters; nor was a copy of the FEA's 10 rescission letter sent to Bray companies. A copy of this letter was, however, sent to the state energy offices in Vermont and | New York. Mr. Pfefferkorn called Dana Bray shortly after August 28th to tell him the "FEA had found us innocent of any wrongdoing in the handling of your account" and that the ''FEA had found Chevron innocent of any wrong- doing in the '73-'74-'75 contracts". State energy officials of Vermont and New York, faced with a critical shortage of heating oils because of Chevron's threat to terminate supply to its sole distributor, directed that a meeting be held between Chevron and Bray companies in Albany, New York on September 17, 1975. The states invited FEA officials to attend the meeting. FEA officials present were Mr. Levine and Mr. Webster, both of whom made it clear from the outset they were there only as observers. ll Neither Mr. Bray nor Attorney O'Brien had ever met Webster prior to this meeting. William Costello was not in attendance. The clear purpose of the meeting was to provide a continued supply of product to up-state New York and Vermont. There was no discussion about the NOPV or the "rescission". At that meeting, Chevron This issue was briefed on appeal to TECA, and appears in Bray companies' Second Circuit appellate brief which was requested and reviewed by the TECA. 6 The TECA found it necessary to decide whether §210(a) of the ESA permits consequential damages resulting from a fraudulent misrepresentation. Therefore, the measure of damages of a federal fraud claim under the Act has yet to be determined. 24 of the 1973 fraud required proof of an entirely different kind than is required to show an overcharge under the ESA and supporting regula- tions. - (Ape. 134° -). Tm fact, the i973 fraud was undoubtedly a state law claim that resulted in damages measured independently by state and federal law, respectively.’ Further, both the district court and the TECA found the 1973 and 1974 contracts invalid. The TECA apparently does not consider the federal judicial principle (which does not per- mit the release of an unknown cause of action (Neuman, Properties, supra), consistent with the public policy embodied in the EPAA and federal regulatory scheme. Whether known or unknown, however, the following regulations Chevron has somehow escaped the consequences of "overcharges" for deliveries of product made May 1-15, 1973. The proper measure of damages for these over- charges are the terms of the 1968 contract set to expire May 31, 1973. The federal concept of "over- charges" is irrelevant to this claim. Likewise, it was improper to apply federal law to these pendent state claims, but this issue will be addressed subsequently. 25 prohibit any deceptive device, including a release, which is designed to circumvent federal regulations, whether or not such conduct amounts to actionable fraud: 10 C.F.R. §205.202 prohibits "... any practice that circumvents ... or results in circumvention ... of the requirements of any provision of this chapter ... as a violation of the DOE regula- tions stated in this chapter; 10 C.F.R. §210.62(c) prohibits "...(a)ny practice which constitutes a means to obtain a price higher than is permitted by the regulations in this chapter..."; 10 C.F.R. §212.82 provides ''...(a) refiner may not charge to any class of purchaser a price in excess of the base price...". Section 210(a) of the ESA gives an unequivocal cause of action to "...(a)ny person suffering legal wrong because of any act or practice arising out of this title or any regulation issued pursuant thereto...''. The TECA failed to recognize 26 these regulations as an expression of public policy. This policy clearly requires a release to be voided where a material misrep- resentation has been made for the purpose of inducing a party to forego its EPAA rights. (App. 190-207) Thus, if a distributor relies on these misrepresentations without investigating the underlying truth, an unknown fraud claim is not actionable and the regulations just cited above will provide no relief. Further, under the TECA's decision, a release will be valid even if the supplier inflicts actionable duress for the very purpose of obtaining a release. (App. 133) The TECA also refused to recognize the federal principle developed in Ingram Corp. v. J. Ray McDermott, Inc., 698 F.2d 1295 (5th Cir., 1983) (A release is valid if it is an integral part of a scheme to violate federal law and to perpetuate that violation). 27 Accordingly, the TECA held: Even if we were to assume that this language provided another means in addition to a fraudulent inducement claim to attack the validity of a release,which we do not, plaintiffs have not shown on the facts of this case that the release is part of any such scheme. (App. 13-14) The court added that the 1975 release was an "outgrowth", rather than a "cause" of the violation, and therefore not a part of any such scheme. (App. 14) The court's distinction between an "out- growth" and a “cause” is remarkable in light of the fact Chevron used the release as a means of terminating FEA's investiga- tion in January of 1975. That Chevron used the release to perpetuate the misclassifi- cation in the 1975 supply contract has been determined by the district court and the TECA. Likewise, the fact that Chevron knowingly violated federal law from 1973 on is revealed by the district court's specific 28 determination of Chevron's intentional overcharge (App. 52-58 ) and deliberate falsehoods uttered to induce Mr. Bray to sign the 19/5 release. (App. 77) If Ingram doesn't apply to this case, it's hard to imagine a case to which it would apply. TECA's decision therefore condones the use of deceptive practices as a means to circum- vent declared public policy which expressly prohibits the use of “any device” for such purpose. Whether or not the EPAA policy favoring private settlement overrides the expressed public policies in matters of nationwide concern is an important federal question that should be resolved by this Court. III. The TECA Has Decided An Important Federal Common Law Fraud Question In A Way Which Conflicts With Shappirio v. Goldberg, 192 U.S. 232 71 obey With Other Federal Courts Of Appeals, And With The Trend Of Modern Law. The district court's grant of judgment 29 Frigitemp, supra, the TECA was actually tracing the development of the purported federal "access" principle. Frigitemp was a Rule 10b-5 - Securities case which stated in dicta, that ..."’(e)ven at common law, if the plaintiff has been furnished with the means of knowledge and he is not prevented from using them, he cannot say that he has been deceived by the misrepresentations of the other party”. Frigitem,, supra at p. 282, citing Shappirio v. Goldberg, 192 U.S. 232, 241-242 (1904). Shappirio, supra, was in fact cited by the district court as the controlling federal law relating to “blind reliance” and "readily available access". Shappirio may represent the last controlling statement by this Court of the federal “access” common law principle of fraud. ® 8 The "access" principle was expressly rejected in Dice v. Akron, C.&Y.R. Co., 342 U.S. 359, 362 (1952). Dice established the federal common law of fraud 32 See 33 A.L.R. 853, 917-918, Anno. - Fraud - Matters of Public Record §§22-24. However, it is quite clear the TECA's requirement of "due diligence” and determination of "access" is entirely inconsistent with the rule of that case. This Supreme Court held in Shappirio, supra at pp. 241-242: There are cases where misrepresentations are made which deceive the purchaser, in which it is no defense to say that hadthe plaintiff declined to believe the repre- sentations and investigated for himself, he would not have been deceived. Mead v. Bunn, 32 NY 275 (party deceived not bound to test the truth of a representa- tion by examinins the public records). But such cases are to be distinguished from the one under consideration. When the means of knowledge are open and at hand or furnished to the purchaser or his agent, and especially where the purchaser undertakes examination for as it relates to a release under the Federal Employer's Liability Act for injuries sustained as a result of the negligence of an employer. This Court, in rejecting the "defense" of "supine negligence” (Plaintiff did not read the release he signed) held: "... a release of rights under the Act is void when the employee is induced to sign it by the deliberately false and material statements of the railroad's authorized representatives made to deceive the employee as to the contents of the release”. 33 himself, he will not be heard to say that he has been deceived to his injury by the misrepresentaticns of the vendor". (citations omitted ) The plaintiff's agent in Shappirio, unlike the plaintiff in Mead, actually undertook an investigation of the public record. He examined the recorded deed and plat and issued a "report upon the title” to Shappirio. The evidence in Shappirio, supra at p. 241, was undisputed that "...(a) casual reading of the description on the deed or examination of the recorded plat ... (would have revealed the truth)”. Shappirio was decided in 1904, before many states had rejected the doctrine of caveat emptor. Modern law has by and large opted for the principle that the "means of knowledge is open and at hand” only "when the recipient of the misrepresentation is capable of appreciating its falsity by the use of his senses’. Restatement, Torts 2d §541, Comment a; cf. Prosser, Law of Torts, 4th ed. §107. 34 siecle This is precisely the principle that a thoughtful reading of Shappirio reveals. 33 A.L.R. 853,918 ("The fact that the court referred, without any expression of dis- approval, to Mead v. Bunn ( 1865) 32 NY 275... may be regarded as indicating somewhat strongly that it is prepared, whenever the point is | directly presented, to adopt the broad doctrine applied in this case”. (This ALR annotation was written in 1924)). Under this rule, "access" to a federal agency does not bar a fraud claim. In federal courts, common law fraud claims usually arise in diversity cases, where the appropriate state law is applied under the Erie doctrine. Federal common law becomes an issue in cases where federal statutes create private claims. Two examples of this situa- tion are the Federal Employer's Liability Act and Securities - Rule 10(b)5 violations. The former situation has been resolved by this 35 Court's articulation of federal common law as it relates to the Act. (Dice, supra, footnote 8). The latter has not been resolved and a conflict has arisen among the federal jurisdictions. The Second Circuit, for instance, apparent- ly adheres to the "access" principle. Frigitemp, supra. The Tenth Circuit relies on the Restatement of Torts, §§540,541: plaintiff is not duty bound to investigate the truth or falsity of an intentional misrepresentation unless the misrepresentation is patently false. Holdsworth v. Strong; 545 F.2d 687 (10th Cir., 1976) In fact, the difference between the Second and Tenth Circuits is more of terminology than anything else. Even under the “un~ restricted access" doctrine of the Second Circuit, the defendant must first establish by uncontradicted evidence, (1) the existence and physical whereabouts of the “true facts", 36 and (2) plaintiffs' unrestricted access to 9 those facts. If the defendant fails to establish this defense as a matter of law, the fraud claim goes to the jury for determination on the merits. Grumman, supra at p. 7/40. To illustrate, the court in Grumman concluded that summary judgment was proper where the defendants produced affidavits which showed plaintiff had a right of unrestricted access to defendants’ plant, files and the performance test results of a particular model bus. Grumman, supra at pp. 738, 740. (The fraud claim concerned representations of good performance and quality of the bus - Grumman had contractually disclaimed reliance on those specific representations). Rohr's affidavits also established that Grumman possessed the "legal, technical and business expertise necessary to make effective use of that access". The defendants’ affidavits were not opposed by any contrary facts pre- 37 sented by plaintiff. Grumman, supra at p. 740. The court held: "Grumman's right to unrestricted access and its failure to inquire preclude, as a matter of law, its claim of reliance on Rohr's alleged misrep- resentations". But the Second Circuit also made it abundantly clear that if plaintiff had introduced specific facts tending to show its "access" was restricted, the fraud claim would have gone to the jury. Grumman, supra at p. 740,10 9 The "access" or "means of knowledge" principle is a defense, not an element of common law fraud. Mallis v. Bankers Trust Co., 615 F.2d 68,80, cert. den. 449 U.S. 1123 (1981) (New York does not recognize "due diligence” as an element of fraud, but rather requires proof of the five traditional elements: (1) misrepresentation of a material fact; (2) falsity of that representation; (3) scienter; (4) reliance; (5) damages. See also Shappirio and Dice, supra. LO Grumman cites Shappirio at p. 737. 38 Petitioners submit the TECA's mandate has clearly shifted to plaintiffs the burden of showing the "true facts" were not available to them. This is not the test, according to Shappirio. The only information plaintiffs ever received about the status cf the FEA investigation was from Chevron. In addition, the following undisputed evidence was intro- duced: (1) the plaintiffs were not a party to the NOPV; (2) they were not copied by the FEA on any matters relating to the investigation of Chevron, including the NOPV and rescission notice; (3) prior to the date of the rescissior. notice, plaintiffs did make a request, by telephone and letter, for a decision. These requests were not responded to by the FEA; (4) three different FEA officials were involved with the NOPV. The point is that even if Chevron met its burden supporting the defense of "access", Bray companies introduced evidence which raised a genuine issue under any standard 39 Chevron certainly could have asked Mr. Costello, the FEA official in charge of the NOPV at the time of the notice of rescission, whether he would have disclosed the true nature of the rescission to Bray companies even though not a party to the NOPV. Chevron did not do so. Chevron could have asked Mr. Costello, during his deposition, (which perpetuated his testimony) whether the rescission notice became part of the public record or offered other evidence showing this to be the case. Chevron did not do this, either, in spite of the fact it has continu- ously asserted that Bray companies’ lack of "due diligence" bars the claim of fraud. On the other hand, Bray Oil did not ask these questions because (1) it wasn't part of the prima facie case, and (2) it was irrelevant under Vermont law which was actually charged il to the jury. Il The district judge applied "federal law" only on consideration of Chevron's Motion for J.N.O.V. 4n ee ee ee a ae What Chevron actually did speaks for itself, and it doesn't come close to showing a "means of knowledge" defense under Shappirio. First, Chevron solicited as an "expert witness", one Melvyn Goldstein, a former director of the Office of Exceptions and Appeals of the FEA. Mr. Goldstein testified that he was "generally" familiar with NOPV procedures, and based on that "general familiarity" of these procedures, he was not aware of any obstacles that might confront a hypothetical Bray Oil in learning from the FEA the basis for a rescission of an NOPV. Mr. Goldstein also testified that he was unaware of any reason that the FEA would not provide the basis of the rescission to Bray Oil, if an inquiry had been directed at the FEA's regional counsel (Mr. Webster). Mr. Goldstein's lack of awareness of any obstacles in FEA regulations to the discovery of the truth, based on his "general familiarity’ with the NOPV procedure, does not establish 41 much of anything. It does not establish that Mr. Gebeter would have revealed the true facts to Attorney O'Brien on September 1/7, 1975, or that the "true facts" were a matter of public record,. or for that matter that the FEA's disclosure of the basis of the rescission would have been timely. Outside of the general familizrity with NOPV procedures, Mr. Goldstein remained mute on the issue of "access". In their appellate brief to the TECA, Bray companies pointed out that FEA regulations prohibited the production. or disclosure of any and all materials "contained in the files of the FEO" without "prior approval of the General Counsel of FEO". 10C.F.R. §202.22 (App. 206 ) It was also brought to the court's attention that information received during the course of an investigation remains 12 Neither Dana Bray nor his attorney, Donald O'Brien had ever heard of or met Mr. Webster prior to September 17, 1975 and did not believe Mr. Webster Was involved with the Chevron NOPV in any event. 42 confidential “unless otherwise determined by FEA". 10C.F.R. §205.201(e) (App. 207) The TECA's conclusion that such regulations would not prohibit FEA disclosure of the mean- ing and effect of the rescission misses the issue entirely. Under these regulations, neither Costello nor Webster was free to disclose any information to Bray companies without prior approval of General Counsel. On the other hand, if the NOPV and notice of "rescission was a matter of public record, Bray companies would have been required to follow the procedures of the Freedom of Information Act. 5 U.S.C.S. §552. The main difficulty in contacting General Counsel or proceeding with the FOIA is that it was FEA's consistent practice through the summer and fall of 1975 to withhold any document, (including NOPV's) relating to ongoing investi- gations initiated by an NOPV. Three related FEA decisions clarify this 43 point: Air Transport Association of America, 2 FEA 80502 (January 10, 1975); Larkin, et al., 4 FEA 80514 (July 22, 1976); and Wall Street Journal, 2 FEA 80558 (March 21, 1975). In Larkin, supra, a request was made under the FOIA for a number of documents to an FEA investigation of Union Oil Company of California concerning the “lawful selling price of gasoline which Union sells to its retail customers". Larkin, supra at p. 80, 553. Larkin's request included "...(r)ecords of any formal or informal rulings, advice or counsel given by the FEA...". Because the investigation of Union was still in progress, the Information Access Officer withheld a Notice of Probable Violatitdn (NOPV) (and other documents relating to the investigation) which the FEA issued to Union on August 9, 1974. Larkin appealed, alleging the Information Access Officer erroneously withheld “access 4G to the requested documents". Larkin, supra at p. 80, 554. The FEA held that "... NOPV's ... issued prior to the date of Wall Street Journal and which were used as discovery devices designed to further an investigation would be exempt from public disclosure while the investigation remained open’. Larkin, supra at p. 80,554. The FEA also determined that the NOPV and other documents requested were exempt under our investigatory records provision of 5 U.S.C. §552(b)(7) because it revealed investigatory techniques and procedures of the FEA. Larkin, at p. 80,554. Wall Street Journal, supra, citing Air Transport Association of America, supra, stated: "The FEA has consistently refused to disclose NOPV's on the grounds they are not subject to mandatory disclosure under Section (b)(7) of the Freedom of Information Act". (emphasis added) Wall Street Journal, at 45 p. 80,668. Read individually or together, the three FEA decisions uphold the FEA practice of non-disclosure of any documents which relate to material compiled for investigatory purposes. Air Transport, supra at p. 80, 502. Air Transport also establishes the investi- gation is not completed until a Remedial Order is issued or the investigation is otherwise terminated. In the case at hand, the “rescission” was not a termination of the investigation. (App. 77 ) It was notification to Chevron that the investigation was to be expanded to areas "technically" outside the scope of the NOPV. Further, the “rescission” did not serve as a formal statement of the alleged violations to be investigated and "rescinded" an NOPV which itself was not a "formal statement of charges issued after a signifi- cant stage of investigation (had been) com- pleted’. 46 Wall Street Journal, supra at p. 80,689. Thus, it is quite apparent why Chevron did not produce evidence demonstrating plaintiffs’ "unrestricted access" to the meaning and effect of the notice of rescission. It is also manifestly unfair for the TECA to reject federal statutes, regulations and FEA decisions which demonstrate, beyond a doubt, that “access” was restricted, if not totally unavailable. The TECA'’s "due diligence” rule is especially harsh where Vermont law is applied to the release by the district judge in his charge to the jury. Another misleading conclusion of the district court, perpetuated by the TECA, was that there were "frequent contacts" between Bray companies and FEA officials. The district judge opined: Bray and Chevron representatives alike were in frequent contact with Mr. Costello and Mr. Webster concerning energy matters. (App. 94 47 The undisputed evidence established absolutely no contacts between Webster and Bray and only one contact between O'Brien and Webster. Mr. O’Brien testified he did not know Uebetar onioe to the Albany meeting on September 17, 1975, and did not believe he was involved in the handling of the NOPV. Dana Bray met Mr. Costello only once in Burlington on May 1, 1975. Costello was present in furtherance of the Chevron investigation. Mr. O'Brien was also in attendance. The only remaining “contact” which O’Brien had with Costello was by telephone on May 27, 1974. The evidence showed that any discussions between FEA personnel and Bray companies were initiated by the FEA. There were no "contacts" at all between representatives of Bray companies and FEA personnel after the telephone call of May 27, 48 1975, except at the Albany meeting. In short, there was one contact with FEA officials in the relevant time frame. The notice of rescission was dated July 28, 1975 and Chevron's written misrepresentation was dated August 28, 1975. "Frequent contacts” is an egregious distort- ion of the evidence, especially in the context of a J.N.O.V. The TECA, in reviewing a grant of J.N.0O.V. was duty bound to give Bray companies the henerit of all reasonable inferences without weighing conflicting evidence, and then uphold the jury's verdict unless the jury's findings could only have been the result of sheer surmise and conject- ure or no reasonable or fair-minded man could have arrived at a verdict against Chevron. Mattivi v. Southern African Marine Corp., 618 F.2d 163 (2d Cir., 1980)., If the TECA has, in fact, searched the record for ‘substantial evidence’ supporting the jury 49 verdict, it is not reflected in the mandate. (App. 1-21) The TECA relies solely on "frequent contacts" to show access and ignores all conflicting evidence. The TECA paraphrases Shappirio ("if the plaintiff has been furnished with the means of knowledge and he is not prevented from using them, (emphasis added) he cannot say that he has been deceived by the misrepresentations of the other party), but it has in every essential misstated or misapplied the Supreme Court principle. The “opportunity to make inquiry" does not establish that such inquiry would have been fruitful and without difficulty. Even a broad reading of Shappirio or Grumman, supra, reveals the burden was on Chevron to establish just that. This Court may also note that TECA has apparently adopted a federal tolling (statute of limitations) provision as the 59 federal common law of the case. Citing Western Mountain Oil, Inc. v. Gulf Oil Corp. 726 F.2d 765 (Temp. Emer. Ct. App. 1983) (The statute of limitations is not tolled by a fraudulent concealment of a cause of action if the true facts would have been discovered by the exercise of due diligence), TECA asserts the Western Mountain "due diligence” tolling provision should apply with greater force to a claim of fraud in the inducement of a release of federal claims. (App. 12) The TECA's mandate has interpreted the Shappirio principle as being synonymous with a federal tolling provision. Further, a plaintiff asserting a federal common law fraud claim now has the burden of showing he acted with due diligence in order to verify a material representation. This ruling is a dangerous precedent which, by its language, purports to apply to any federal fraud claim. It also condones deceitful 51 and unlawful price gouging which is contrary to the public policy embodied in the emergency federal statutory scheme enacted at a time of national crisis. IV. Congressional Intent, Public Policy, And The Decisions Of This Court Required The TECA To Determine The Validity And Scope Of The 1975 Release According To Vermont Law. Insofar as the 1975 release related to federal claims, it is clear that the district judge was required to apply federal law. Dice, supra. The District Judge Holden adopted Vermont law as the federal law, and he so charged the jury. However, upon review of Chevron's motion for J.N.0.V., the district judge changed his mind and applied a somewhat confusing blend of authorities, the most notable being Shappirio, supra. On appellate review, the TECA ostensibly adopted Shappirio by reference to Second Circuit case law. (App. 12) In reality, however, the TECAhas misstated Shappirio a2 by equating that case with a federal to_ling provision (App. 12). Bray companies have thus been laboring under a quite elusive concept of federal common law fraud ranging from a near absolute right of reliance (Negyessey v. Strong, 136 Vt. 193, 195 (1980); Lunnie v. Gadapee, 116 Vt. 261, 265 (1950)) to a "means of knowledge” defense (Shappirio), and finally toa require- ment of due diligence as part of the prima facie case. (Western Mountain, supra). This problem has perhaps arisen because, since the time Erie Railroad Company v. Tompkins, 304 U.S. 64 (1938) was decided, there has been no "general" federal common law, but only specialized federal common law that relates to particular areas of federal interest. ‘U.S. Vv. Standara: O21. Go. .-332 U. 3. 301, 308 (1947); Wright, Miller and Cooper, Federal Practice and Procedure: Jursidiction §4514. However, both the district court and 53 the TECA were subject to the choice of law principles laid down in the applicable decisions of this Court. In 1979, the Ninth Circuit provided the following summary of these principles in United States v. Crain, 589 F.2d 996,999 (9th Cir., 1979): The federal courts are generally free to draw upon any and all traditional sources in developing federal common law. United States v. Best, 573 F.2d 1095, 1109 (9th Cir., 1978). Often state law is an appropriate source. Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 457, ‘i S. Ct. -9i2; 2. Be. 24 S72 CE9S7) Royal Indemnity Co. v. United States, 313 U.S. 289, 296-97 61; S. Ct. 995, 85 L. Ed. 1361 (1941); Board of Commiss- ioners v. United States, yp 3, 350-52, 50 S.Ct. 285, 84 L.Ed. 313 (1939); United States v. Best,573 F.2d at 1102. Even when an ‘action arises under and is clearly determined by federal law, state law limiting the enforcement of a federal right is sometimes adopted as the federal rule'. United States v. Hadden Haciendas Co., 541 F.2d 777, 783 (9th Cir., 19/6) As stated in Hadden, whether or not state law will be adopted as the federal common law rule depends on ‘whether the state law can be given 54 effect without conflicting with federal policy.’ id. at 784... (other citations omitted ). Conversely, rejection of the state rule should be avoided where the adoption of a different federal rule would unduly interfere with the state's interests." Vermont law is consistent with congressional intent and public policy embodied in the EPAA as well as traditional and modern common law fraud. One eloquent expression of the law appears in Crompton v. Beedle & Thomas, 83 Vt. 287, 301-302 (1910). The court, in Crompton traces the origin of Vermont's rejection of the defense of negli- gence to an intentional misrepresentation: The doctrine (due diligence) inconsistent with that which has been declared by this Court is said by the writer last quoted (Bigelow) to be dead in England if it ever existed there and moribund in this country ... In a House of Lords case, this principle was thus declared by Lord Chancellor Chelmsford: "When once it is established that there has been any fraudulent misrepresentation or wilful concealment by which a person has been induced to enter a contract, it is no answer to his claim to be relieved 55 from it to tell him that he might have known the truth by proper inquiry Any different doctrine carried to its logical conclusion would facilitate transactions in gold bricks, salted mines, bogus diamonds as real, facsimilies as originals, and would permit a variety | of things destructive to commercial integrity. The maxim which requires a party to a trade to look out for himself has a wide and broad application. We would not traduce it or deny to it the legitimate application to which it is entitled. But it cannot be permitted that that maxim should be so construed as to portraying the law in caricature and to render it an instrument of craft, a tool of fraud, a talisman of injustice, a key by the use of which one man may plunder another. For the commerce of the world is promoted not by cunning but by such wisdom as is consistent with that good faith which underlies | everything in the social order that has stability". Vermont had a very real interest in keeping its citizens warm during a national fuel oil shortage, as well as a long standing commitment to integrity in the marketplace. See Crompton, supra. Yet the district court and now the TECA rejected Vermont law and the basis for that rejection cannot accurate- 56 ly be determined. The critical inquiry should have been "whether Vermont law could be given effect without violating federal policy’. (Hadden, supra). Federal policy in turn, was subject to the "paramount authority of congress". New Jersey v. New York, 283 U.S. 336 (1931). An expression of congressional intent is found in the EPAA, 15 U.S.C. §753(b) (1) (App. 193-199), and the following excerpts are particularly relevant: (b) (1) The regulation under subsection (a) of this Section. to the maximum extent practicable, shall provide for -- (a) Protection of public health ... safety and welfare (including maintenance of residential heating, such individual homes, apartments, and similar occupied dwelling units), and the national defense. (d) Preservation of an economically sound and competitive petroleum industry ... 57 and to preserve the competitive viability of independent refiners, small refiners, nonbranded independent dealers, and branded independent marketers ... (emphasis added). This intent is buttressed by §§208,2909 and 210 of the ESA (as incorporated in the EPAA) which provide for criminal and civil penalties as well as private suits for damages or other relief for any “legal wrong because of any act or practice arising out of this title, or any order or regulation issued pursuant thereto”. (App. 190 ). Perhaps of even greater importance is that since 1979, several significant decisions involving federal common law have issued from this Court, including Northwest Airlines, Inc. v. Transport Workers Union of America, AFL-CIO, 101 S.Ct. 1571 (1981); Texas Industries, Inc. v. Radcliffe Materials, Inc., 101 S.Ct. 2061 (1981) and City of Milwaukee v. 58 Illinois, 101 S.Ct. 1784 (1981). An often cited and prominent authority has made an analysis of these decisions: These cases, read together, reveal at least one central theme: a renewed emphasis upon the fact that federal common law is ‘subject to the paramount authority’ of Congress. Indeed, the 1980-1981 Term cases may be read to say that courts cmpcaly should be reluctant to develop federal common law, absent some signal from Congress. If this reading is correct, then it is likely that future years will see a vastly more restricted use of federal common law’. Wright, Miller & Cooper Federal Practice & Procedure Jurisdiction §4514 at p. 274 The EPAA was an emergency act designed to protect the citizens and the marketplace from price exploitation that would have inevitably attended the short supply of an essential product. The clear signal from Congress was that no deceptive practice would be tolerated during such conditions. To rule, as the TECA has done, that Vermont law is contrary to congressional intent and public policy, cannot 59 be justified. V. The Erie Doctrine Required The TECA To Apply Vermont Law To A Release Of A Pendent State Fraud Claim. The federal court acquired pendent jurisdiction over the 1973 fraud claim. It charged Vermont law to the jury, and the court upheld the jury determination of fraud on the basis of Vermont law. (App. 144) The material misrepresentation itself, related to the retroactive date of the "as of May 1, 1973" contract. In his July decision, the district judge confirmed that under Vermont law, the terms of the prior contract will be substituted for a subsequent cor -sact procured through fraud. (App. 175) The federal price regulations were therefore not the sole measure of damages. The measure of damages was the price terms of the prior contract, at least through May 31, 1973 when the prior contract was set to expire. Thus, 69 the source of this claim is state law, and under Erie Railroad Company v. Tompkins, 304 U.S. 64 (1938) state law must be applied to a release of a state claim. Maternally Yours, Inc. v. Your Maternity Shop, Inc., 234 F.2d 538 (2d Cir., 1956) (""... the Erie doctrine applies, whatever the ground for federal jurisdiction to any issue or claim which has its source in state law".); cf. United Mine Workers v. Gibbs, 383 U.S. 715 (1966) and Dice, supra: (Federal law applies to a release of feceral claims). The TECA as well es the district court, plainly erred in applying federal law to a release of a state claim. (App. 17-18) This error underscores the confusion of the TECA in construing the scope and the validity of the release. The decision of the TECA should not be permitted to stand. 61 CONCLUSION The petition for a writ of certiorari should be granted. Respectfully Submitted, JOHN P. MONTE, ESQ. Attorney of Record RICHARD E. DAVIS, ESO. Attorney for Petitioners May 23, 1985 62 APPEND IX' Nos. 2-41, 2-42, 2-45, 2-46 NORTHERN OIL COMPANY, INC., BRAY OIL COMPANY, INC., NORTHERN TERMINALS, INC., and DANA S. Bray, PLAINTIFFS-APPELLANTS AND CROSS-APPELLEES, Vv. STANDARD O1L COMPANY OF CALIFORNIA and CHEVRON U.S.A. INC., DEFENDANTS-APPELLEES AND CROSS-APPELLANTS. Appeal from the United States District Court for the District of Vermont (Civil Action 78-231) Argued January 18, 1985 Decided March 18, 1985 Judgment Entered: March 26, 1985 RICHARD E. DAvis, Richard E. Davis Associates, Inc., Barre, Vermont, with whom David L. Cleary, Miller, Norton & Cleary, Rutland, Vermont, were on the brief, for Plaintiffs-Appellants and Cross-A ppellees. JEFFREY S. FACTER, Cravath, Swaine & Moore, New York, N.Y., with whom Allen F. Maulsby, Steven H. Rouhandeh and Robin C. Landis, of the same firm, were on the brief; Douglas C. Pierson and Richard W. Affolter, Pier- son, Affolter & Wadhams, Burlington, Vermont, of Coun- sel, for Defendants-Appellees and Cross-Appellants. Before HOFFMAN, GIGNOUX and METZNER, Judges. METZwWER, Senior District Judge: This is an action for overcharges, and for consequen- tial and punitive damages, under Section 210(a) and (b) of the Economic Stabilization Act of 1970 (“ESA”), 12 1 2 U.S.C. § 1904 note (1980 Supp.), as incorporated in the Emergency Petroleum Allocation Act (“EPAA”), 15 U.S.C. § 751 et seq., for violations of various regulations implementing the EPAA, and for common law fraud, brought in 1978 by plaintiffs-appellants ana cross- appellees Northern Oil Company, Inc., Bray Oil Company Inc., Northern Terminals, Inc., and Dana S. Bray, as owner of the three companies (hereinafter collectively re- ferred to as “Bray Oil”), against defendants-appellees and cross-appellants Standard Oil Company of California (“SoCal”) and its wholly-owned subsidiary Chevron U.S.A. Ine. (“Chevron”). Both sides appeal from a final judgment entered on April 10, 1984, by Judge Holden in the District of Vermont which awarded plaintiffs $210,000 in damages for overcharges by Chevron on the price of home heating oil, prejudgment interest, statu- tory penalties of $210,000 and attorneys’ fees and other expenses." BACKGROUND The complex factual background of this case is more than adequately set out in three comprehensive opinions by Judge Holden. For present purposes we outline the facts upon which our decision is predicated. During the time period relevant to this action, Bray Oil was a major distributor of home heating oil in New York and Vermont. Since 1968 it had purchased its prod- uct from Chevron pursuant to a contract effective by its terms until May 31, 1973. Under the terms of that con- tract, Bray Oil purchased product at prices posted by Chevron at Albany, New York, and Burlington, Vermont, 1 Chevron filed a counterclaim to collect the unpaid balance on a promissory note from plaintiffs. An earlier state court suit on ‘jis issue was stayed pending the outcome of the federal litigation. Judge Holden granted judgment on that counterclaim for an aggregate amount in excess of $3.2 mil- lion. Plaintiffs have not challenged that judgment on this appeal. 3 minus certain discounts. Well before that contract was due to expire the parties began negotiations for a new contract. Chevron demanded, among sther things, pricing terms more favorable to it because its profits under the old contract had steeply declined. In early May of 1973 Chevron made several deliveries which Bray Oil accepted and later paid for at a higher price than provided for in the written contract in effect at the time of the deliveries. In July of 1973, after hard bargaining between the parties, Chevron convinced plain- tiffs to enter into a new contract with pricing terms F.0.B. New York Harbor. This new contract also pro- vided that it would be effective “as of May 1, 1973.” Chevron informed Bray Oil that it desired the backdat- ing in order to have all its customers signatory to con- tracts with that uniform date. The jury found at trial that this representation was false or misleading, and that Bray Oil relied on the representation in agreeing to the backdating of the contract. On July 19, 1973, after many but not all of the docu- ments comprising the new contract had been signed, the Cost of Living Council (“COLC’’) proposed for notice and comment a regulation fixing May 15, 1973, as the freeze date for Phase IV of the federal energy regulatory pro- gram. The last of the documents comprising the “as of May 1, 1973” contract were signed on August 13, 1973. On August 19, 1973, the freeze date of May 15, 1973, was adopted. 38 Fed. Reg. 22536, 22541 (August 22, 1973). Once the price regulations were promulgated, Chevron placed Bray Oil in a “class of purchaser” (10 C.F.R. § 212.31) reflecting the new backdated contract terms rather than those of the old contract which had been in effect on May 15, 1973. Because of this, Chevron was able to and did charge Bray Oil a higher price under the regulations than would have been lawful if Bray Oil had been classified pursuant to the price terms of the old contract. 4 In the summer of 1973 Bray Oil transferred nearly seven million gallons of heating oil to one of its customers, Green Mountain Petroleum Company, and received more than one million dollars in payment without reporting the transaction to Chevron (the “Green Mountain transac- tion”). This violated the consignment terms of Bray Oil’s contract with Chevron. Chevron learned of the Green Mountain transaction by chance six months later. As a result of this transaction, Chevron insisted on new credit terms when the parties negotiated a new agreement for 1974-75. The 1974-75 contract established a fixed schedule of payments based on the 1972 pattern of withdrawals. Subsequently, one of Bray Oil’s customers filed a com- plaint with the Federal Energy Administration (“FEA’’) concerning the change in credit terms. On October 24, 1974, the FEA issued a Notice of Probable Violation (“NOPV”) to Chevron and commenced an investigation. As a result, in November of 1974, Bray Oil unilaterally ceased paying Chevron in accordance with the fixed pay- ment schedule of the 1974-75 contract and instead re- turned to the previous consignment arrangement. Chevron did not challenge Bray Oil’s action because of the FEA’s ongoing investigation regarding the NOPV. Because the winter of 1974-75 was mild, the payments for withdrawals were less than what would have been called for by the fixed payment schedule. The parties failed to resolve their differences before the expiration of the 1974-75 supply contract on May 1, 1975. On July 24, 1975, the FEA notified Chevron that it was rescinding the NOPV in order to broaden the in- vestigation to include the retroactive effect of the “as of May 1, 1973” contract, but that it would be unable to proceed with the investigation until it had greater man- power. In a letter dated August 28, 1975, Chevron in- formed Bray Oil of the rescission, but not the reason for it. pla aN it Nice 5 At that time both parties were under pressure to reach an agreement. -With the rescission of the NOPV, Chevron had put Bray Oil on a “cash first” delivery basis, which precluded Bray Oil from being able to purchase its full needs for the winter. In addition, the transportation of product would become increasingly difficult as the weather worsened. For its part, Chevron feared adverse publicity if a shortage of home heating oil developed. After media- tion by FEA and state officials, the parties on October 14, 1975, reached agreement on the 1975-76 supply contract. In conjunction with that agreement, Chevron agreed to an interest-free promissory note on the substantial debt owed it by Bray Oil. Bray Oil in turn signed a gen- eral release which purported to release Chevron from any claims, including those under the EPAA, Bray Oil may have had stemming from the relationship between the parties under the “as of May 1, 1973” contract.? 2 The release provides as follows: “IT IS AGREED by and between Chevron and Bray that Chevron hereby releases Bray and Bray hereby re- leases Chevron and each of them hereby releases each of their respective parent corporations, if any, affiliates, successors and assigns, servants, agents and employees, from and against any and all loss, cost, claims, damages, liabilities, actions, and causes of action which each may have or which each may allege to have had against the other arising out of actions, agreements, contracts, com- mitments, relationships or action taken or omitted to be taken up to the date hereof based on tort, contract, negli- gence, anti-trust or violation of State or Federal Regula- tions excluding, however, the following: A) Payments under Agreements existing immedi- ately prior to the execution hereof with respect to the sale of products referred to therein, pay- ment for which is not to be made prior to the effective date hereof and which have not other- wise been resolved as between Chevron and Bray, B) Obligations undertaken by Bray and its affiliates, or any one or more of them, with respect to 6 Following the expiration of the 1975-76 contract, Mr. Bray sold or leased his various properties and retired to Florida, leaving behind a substantial balance on the promissory note as well as other obligations to Chevron. The instant suit was commenced in 1978 and resulted in a bifurcated trial. In the liability phase, which lasted seven months, the jury returned eleven special verdicts with a total of 52 subparts. The jury found, among other things, that at the time Chevron was negotiating a new contract with plaintiffs in 1973, it represented to Mr. Bray that the reason for selecting the “as of May 1, 1973” starting date was to place all distributors of middle distil- lates on a uniform contract year. The jury found that this representation was false or misleading, that Mr. Bray relied on the representation, and that plaintiffs suffered financial harm as a result of signing the 1973-74 contract. The jury found as well that Bray Oil had no knowledge financing loans, through banks, the re-payment of which loans Chevron has guaranteed at the request of Bray and its affiliates, or any one of them, and C) Obligations undertaken by Chevron and/or Bray arising out of Agreements executed on or after this date in the resolution of past differences. Bray,-by its execution hereof, acknowledges the validity of certain arrangements entered into between it and Chevron dated as of May 1, 1973 and as of May 1, 1974 relating to the purchase and sale of petroleum products. Bray further acknowledges that it shall file no claim, complaint or charge for its own intended benefit, or that of others, nor be entitled to retain the benefit of the disposition of a claim, complaint or charge filed by any other party with the Federal Energy Administration involving Chevron’s allocation and pricing practices to- wards Bray under Acts or Regulations relative to Fed- eral Price Control and Allocation Regulations presently within the jurisdiction of the Federal Energy Adminis- tration.” 7 at the time regarding the COLC consideration of the proposed freeze date. Relying on the jury’s findings, the district court held that Chevron’s misrepresentation of its reason for seeking the backdating term amounted to fraud which invalidated the entire contract. The court therefore classified plain- tiffs according to the terms of the old contract, and de- termined that Chevron had overcharged plaintiffs under 10 C.F.R. § 212.82 and Section 210(b) of the ESA. The court concluded, however, that the release executed by Bray Oil in 1975 barred recovery for overcharges made prior to its execution. DISCUSSION Numerous issues have been raised on this appeal by both sides. The most important one involves the validity and effect of the mutual general release executed on October 14, 1975. Bray Oil asserts on appeal that the district court erred in setting aside special verdicts in which the jury found that Chevron had fraudulently in- duced Bray Oil to execute the release. Chevron contends in its cross-appeal that the district court erred in holding that the release does not bar the claim for overcharge damages based upon deliveries made after October 14, 1975. I. The Release A. Jurisdiction We turn first to the question of this court’s jurisdiction to determine the issue of the validity and effect of the release. It is clear that this court has jurisdiction over an issue when “resolution of the litigation in its entirety requires the application or interpretation of the EPAA and regulations, and [when] an EPAA issue has been adjudicated in the district court.” Mobil Oil Corp. v. De- partment of Energy, 728 F.2d 1477, 1497 (Temp. Emer. 8 Ct. App. 1983) (citations omitted). See also Mountain Fuel Supply Co. v. Johnson, 586 F.2d 1375, 1381 (10th Cir. 1978) (case arises under the EPAA if it “clearly and substantially involves a dispute or controversy respecting the validity, construction or effect of such laws which is determinative of the resulting judgment’), cert.’ denied, 441 U.S. 952 (1979). Accord Scallop Corp. v. Tully, 705 F.2d 645, 647 (2d Cir. 1983). Our jurisdiction has been construed as “issue jurisdiction.” Coastal States Market- ing, Inc. v. New. England Petroleum Corp., 604 F.2d 179 (2d Cir. 1979); Texaco, Inc. v. Department of Energy, 616 F.2d 11938 (Temp. Emer. Ct. App. 1979). As the court noted in Texaco, “jurisdiction is not an either-or proposition with regard to the case as a whole. Rather the Court takes jurisdiction over those issues which it has authority to decide, refusing to hear any others, al- though they are part of the same case or controversy.” Id. at 1197. As a general rule, this court has declined jrisdiction and permitted a bifurcated appeal only where the issues over which it declines jurisdiction provide an independent substantive ground for relief, or will not facilitate the decision of an EPAA claim. See Atlantic Richfield Co. v. Department of Energy, 655 F.2d 227, 233 (Temp. Emer. Ct. App. 1981) (purely private contract claims) ; Long- view Refining Co. v. Shore, 554 F.2d 1006, 1009 n.5 (Temp. Emer. Ct. App.) (antitrust and contract claims), cert, denied, 434 U.S. 886 (1977); Spinetti v. Atlantic Richfield Co., 522 F.2d 1401, 1403 (Temp. Emer. Ct. App. 1975) (antitrust, fair trade and fraud claims). In Newman Oil Co. v. Atlantic Richfield Co., 597 F.2d 275 (Temp. Emer. Ct. App.), cert. denied, 444 U.S. 842 (1979), we held that this couit had jurisdiction over a cause of action arising from a fraudulent representation intended to induce a party to forgo EPAA rights. 597 F.2d at 279. The release issue in this case is under appeal precisely because Bray Oil contends that Chevron made a 9 false representation to it which induced it to sign a release forgoing any EPAA rights it might have: had. Newman Oil therefore controls this case. See also Rainey v. Union Oil Co. of California, 732 F.2d 1563, 1564, n.1 (Temp. Emer. Ct. App. 1984) (breach of contract and tortious interference with contract claims adjudicated be- cause of interdependency with EPAA claims) ; Mobil Oil Corp. v. Department of Energy, 728 F.2d at 1497 (exer- cising jurisdiction to decide issue of contract interpreta- tion because “incident to and interwoven with,” over- charge claim) ; Francis Oil and Gas Inc. v. Exxon Corp., 687 F.2d 484, 487 (Temp. Emer. Ct. App.) (breach of contract claim that alleges entitlement to a specific price based upon the federal price regulations clearly falls within TECA jurisdiction), cert. denied, 459 U.S. 1010 (1982). B. Validity of the Release In a long and carefully reasoned discussion of the evi- dence and the applicable law, the district court set aside those special verdicts of the jury which indicated that the release of EPAA rights given by plaintiffs in conjunction with the signing of the 1975-76 contract had been in- duced t, fraud on the part of Chevron. The district court concluded that the release was obtained as the result of hard bargaining between two sophisticated commercial entities, and that plaintiffs had not in fact relied on any misrepresentation Chevron muy have made regarding FEA action concerning the relationship between the par- ties. The court also held that under federal law appli- cable to the release plaintiffs had no right to rely blindly on any misrepresentation Chevron may have made because plaintiffs had adequate access to information regarding the rescission of the NOPV. Plaintiffs raise four objec- tions to the district court’s holding. After careful con- sideration, we hold that none has merit and affirm the dis- trict court’s ruling that as a matter of law the release was valid. 10 Plaintiffs first argue that the district court erred be- cause in setting aside the special verdicts it necessarily passed upon the credibility of witnesses and so usurped the jury’s function. The evidence must be viewed in the light most favorable to the plaintiffs here. Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir. 1970). The standard for reviewing the district court’s action is whether “the evidence is such that without weighing the credibility of the witnesses there can be but one reasonable conclusion as to the verdict...” Brady v. Southern Railway Co., 320 U.S. 476, 479-80 (1943). Our review of the evidence discloses that on July 24, 1975, the FEA informed Chevron by letter that it was rescinding the NOPV it had issued the year before, but would, when it had available manpower, broaden the scope of the investigation to include possible violations stem- ming from the backdating of the “as of May 1, 1973” contract. Chevron later informed Bray Oil of the rescis- sion in a letter dated August 28, 1975, but did not state the reason for or the effect of the rescission. The claim of fraudulent inducement is in essence based upon the allegation by Mr. Bray that a few days after receipt of that letter he received a telephone call from a Chevron employee stating that the FEA had found Chev- ron innocent of any wrongdoing in the handling of the Bray Oil account. Bray Oil asserts that this false state- ment caused it to believe that it no longer had EPAA rights against Chevron, and induced it to sign the release. As noted above, Bray is a sophisticated businessman represented by counsel. A telephone call or letter to the FEA would have revealed the true facts. Neither was availed of by Bray. Moreover, Bray and his attorney were often in contact with FEA officials, including a lengthy meeting on September 17, 1975, but never asked about the rescission of the NOPV. Finally, Bray ad- mits that after these representations were made, he was 10 11 advised by his attorney, in a letter dated September 9, 1975, to proceed with a complaint before the FEA. , Although Judge Holden charged the jury under Ver- mont law on this issue, he later correctly determined that federal law governed the validity and effect of the release. See Locafrance U.S. Corp. v. Intermodal Sys- tems Leasing, Inc., 558 F.2d 1113, 1115 (2d Cir. 1977) (federal law governs aJl questions relating to purported releases of federal statutory causes of action). See also Dice v. Akron, Canton & Youngstown Railroad Corp., 342 U.S. 359, 361 (1952). We find that the district court was clearly correct in ruling that as a matter of federal law plaintiffs were under a duty to investigate the true status of the FEA action and were not entitled to rely on the representations of their adversary in the midst of negotiations when they had several opportunities to make such inquiry of the FEA itself. This court has specifically held that in forgoing the assertion of rights under the EPAA, a buyer cannot blindly rely on a false statement by a seller as to action taken by an enforcement agency when the buyer has ac- cess to that agency. Western Mountain Oil, Inc. v. Gulf Oil Corp., 726 F.2d 765 (Temp. Emer. Ct. App. 1983). In Western Mountain, the court rejected a fraud claim similar to the one here asserted by Bray Oil. Plaintiff in that case asserted that the statute of limitations had been tolled by defendant’s false representation that the FEA had approved its pricing structure. This court held, however, that though the statement may have been false, it did not constitute fraudulent con- cealment because plaintiff had a duty to investigate: “While Gulf may have wrongfully asserted the propriety of its pricing method, we do not find that appellant was entitled to blindly rely on that asser- tion without making any further investigation. Nor do we find the existence of any fiduciary relationship 11 12 between the parties which might excuse the duty of further investigation.” 726 F.2d at 768. Western Mountain makes clear that Bray Oil had no right to reply blindly on any false statement by Chevron made during negotiations when Bray Oil clearly had ac- cess to the true facts regarding the rescission of the NOPV.’ See also Grumman Allied Industries, Inc. v. Rohr Industries, Inc., 748 F.2d 729, 737-38 (2d Cir. 1984) (recognizing principle of federal and New York common law that misrepresentation made during busi- ness negotiations not actionable if adversary had access to information) ; Aaron Ferer & Sons Ltd. v. Chase Man- hattan Bank, N.A., 731 F.2d 112, 123-24 (2d Cir. 1984) (concealment of material fact during negotiations sur- rounding a business transaction not actionable fraud if adversary had access to, but did not pursue investigation of, true fact); Frigitemp Corp. v. Financial Dynamics Fund, Inc., 524 F.2d 275, 282 (2d Cir. 1975) (“if the plaintiff has been furnished with the means of knowledge * The fact that in Western Mountain the fraud claim was asserted to avoid the operation of the statute of limitations does not diminish its application here. Indeed, its rule applies with even greater force to an effort to avoid a release. While for policy reasons courts have tended to disfavor strict en- forcement of statutes of limitations, they have generally favored strict enforcement of releases granted in a commer- cial context for valuable consideration and with advice of counsel. Compare Chase Securities Corp. v. Donaldson, 325 U.S. 304, 314-16 (reflecting willingness to permit impact of statutes of limitation to be restricted), reh’g denied, 325 U.S. 896 (1945) with Locafrance U.S. Corp. v. Intermodal Systems Leasing, Inc., 558 F.2d at 1115 (encouraging enforcement of releases made in commercial context where language of re- lease is clear), and Ruskay v. Waddell, 552 F.2d 392, 398 (2d Cir.) (“strong policy considerations require that what all parties thought to be a closed matter [by virtue of a general release] should remain so.”), cert. denied, 434 U.S. 911 (1977). 13 and he is not prevented from using them he cannot say that he has been deceived by the misrepresentations of the other party.”). The regulations cited by plaintiffs, 10 C.F.R. § 202.9 and § 205.201(e), clearly do not prohibit the release by the FEA of the fact and effect of the rescission of a NOPV. Such regulations were designed solely to protect the confidentiality of business information supplied by parties to the NOPV and the integrity of the internal processes of the agency itself. Plaintiffs next argue that as a matter of law the re- lease is contrary to public policy. We have made it quite clear, however, that the EPAA embodies a policy favor- ing private settlement of disputes under the statute. See Longview Refining Co. v. Shore, 554 F.2d at 1012. There is no public policy which prohibits an otherwise valid release from operating to bar federal statutory causes of action. See Mittendorf v. J. R. Williston & Beane, Inc., 372 F. Supp. 821, 835 (S.D.N.Y. 1974). Plaintiffs also argue that the release is void as a matter of public policy because it is an involuntary re- linquishment of federal rights. It is abundantly clear, however, that “involuntary relinquishment” is not an in- dependent ground for setting aside a release, but merely a shorthand reference to the traditional grounds for re- scission—which the district court held inapplicable both because plaintiffs knew they were releasing claims that they might have under the EPAA against Chevron and because they were not entitled as a matter of law to rely on statements made by adversaries under such circum- stances. This contention therefore adds nothing to the plaintiffs’ case. Finally, plaintiffs contend that the release is void be- cause it is part of an integral scheme to violate federal law and to perpetuate that violation. The rely on Ingram Corp. v. J. Ray McDermott, Inc., 698 F.2d 1295 (5th Cir. 14 1983), an antitrust conspiracy case which discussed the possible application of such a standard to a future case whose facts merited it. Even were we to assume that this language provided another means in addition to a fraudulent inducement claim to attack the validity of a release, which we do not, plaintiffs have not shown on the facts of this case that the release is part of any such scheme. As the court noted in Ingram, if the release is merely an outgrowth, rather than a cause, of the violation, it cannot be part of any such scheme. 698 F.2d at 1315. C. Scope of the Release—Statutory Claims In construing the scope of the release, we must give effect to the intent of the parties, as demonstrated by the language of the release itself and the circumstances sur- rounding its execution. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 342-48 (1971). We agree with the district court that by the plain language of the release, the- parties settled all claims under previously ex- isting contracts in the context of the applicable federal law and regulatory scheme. The district court went on to hold, however, that the release did not bar claims for damages in the contract year following its execution because the cause of action for these damages accrued after the release had been executed. The court stated that the “release executed by Bray barred matured claims then accrued; it did not bar claims that might arise from future violations of federal law.” In a later decision confirming its prior ruling, the district court held that prospective application of the release would offend public policy and undermine the policy of the price freeze regulations to maintain the supplier-purchaser relationship as it was_in 1972-73. This court has consistently held, however, that a cause of action for an overcharge based on an improper classi- fication accrues at the time of the original improper clas- sification. Western Mountain Oil, Inc. v. Gulf Oil Corp., 14 15 726 F.2d at 767; Fleetwing Corp. v. Mobil Oil Corp., ‘126 F.2d 768, 770 (Temp. Emer. Ct. App. 1983) ; Lerner v. Atlantic Richfield Co., 731 F.2d 898, 900-01 (Temp. Emer. Ct. App. 1984). In these cases this court has clearly rejected the “continuing violation” theory in the context of actions for overcharges based on an improper classification. See also Siegal Oil Co. v. Gulf Oil Corp., 701 F.2d 149, 153 (Temp. Emer. Ct. App. 1983) (con- tinuing violation concept rejected as to claim under sub- stitute supplier rule). The fact that the instant case involves a release, while the cases referred to involve the application of the statute of limitations, is a distinction without a difference in this case. We find no legitimate policy reason for allowing a party to escape the effects of an otherwise valid release more easily than he could a statute of limitations. The cause of action for all damages arising from the improper classification, there- fore, accrued prior to the execution of the release. The general proposition that public policy precludes the application of a release to bar claims that arise from future violations of federal law is therefore not an issue here. See Fox Midwest Theatres, Inc. v. Means, 221 F.2d 173, 180 (8th Cir. 1955); Pearlstein v. Scudder & Ger- man, 429 F.2d 1136, 1143 (2d Cir. 1970), cert. denied, 401 U.S. 1013 (1971); Weinraub v. International Bank- note Co., Inc., 422 F. Supp. 856, 858 (S.D.N.Y. 1976). This case does not invoke the policy concerns inherent in the situation where a release purports to allow a know- ingly guilty party to violate federal law in the future. Since the cause of action for any overcharges during the contract year 1975-76 arose at the time of misclassifica- tion in 1973; there is no future violation present here. There are only future damages arising from a past violation. It is clear that parties may agree to release claims of future damages arising from past violations of fed- eral law where the cause of action for the past violation 15 16 had accrued at the time the release was executed. See United States v. Allegheny-Ludlum Industries, Inc., 517 F.2d 826, 853-54 (5th Cir. 1975) (release bars all Title VII claims for damages incurred because of continuing effects of past violations, cert. denied, 425 U.S. 944 (1976); Marketing Assistance Plan, Inc. v. Associated Milk Producers, Inc., 338 F. Supp. 1019, 1022 (S.D. Tex. 1972) (release bars damages from pre-release activity not consummated until after release executed). See also Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. at 348 (parties may validly release future damages). Judge Holden held that the Western Mountain rule as to the accrual date of overcharge claims was inapplicable to this case because of certain exclusionary language in the release: “While the argument has some surface appeal, it ignores the particular language of the 1975 release agreement which carves out three exceptions from its operation and effect. One of these exclusions is [C] Obligations undertaken by Chevron and/or Bray arising out of Agreements executed on or after this date in the resolution of past differences. It seems clear enough to the court that overcharges resulting from a misclassification grounded in fraud which was carried forward to the supply agreement ‘executed on or after’ October 14, 1975, were not ex- tinguished. While the release purported to compromise any claims of fraud that attended the prior arrangements ‘as of May 1, 1973 and as of May 1, 1974,’ it specifi- cally excluded the contract relating to sale and pur- chase of petroleum products executed on or after the date of the settlement.” From the face of the release and the evidence in the record, however, it is quite clear that this exclusionary language applied only to a promissory note executed that 16 17 day to resolve past differences between the parties con- cerning certain debts. Other exclusionary language re- garding payments under already existing agreements is equally inapplicable. Both parties understood that the release was drafted to preclude any challenges to the pricing and credit terms of the “as of May 1, 1973” and May 1, 1974 contracts.* The district court therefore erred in holding that the release does not bar claims for overcharge damages in the contract year following its execution.° D. Scope of the Release—Common Law Claims The district court held that plaintiffs’ exclusive remedy in this action was damages for overcharges under Sec- tion 210(b) of the ESA. Plaintiffs claim that they have suffered other legal wrongs separate from the over- charges which should be compensable under Section 210(.) of the ESA. These wrongs, plaintiffs claim, stem from common law fraud and the consequential loss caused because the overcharges placed them in a noncompetitive market position ultimately causing the sale of the busi- nesses below fair market value. Our holding as to the validity of the release makes it unnecessary for us to consider the correctness of the dis- trict court’s ruling that plaintiffs’ damages were limited to those provided under Section 210(b). The release effec- * Indeed, as Bray Oil’s attorney testified, he and his client were aware prior to the signing of the release that “once [the validity of the 1973-74 contract] was resolved, well, then that resolution would extend throughout the time that this particular commodity, petroleum, was regulated.” (Tr. 7672; Def. App. No. 2-42 at 168). 5 We need not address plaintiffs’ claim that the negotiation and execution of the “as of May 1, 1973” contract violated various other EPAA regulations. The release bars recovery for any damages stemming from the alleged violation of all EPAA regulations. 17 18 tively bars recovery for any damages stemming from common law fraud based on the negotiation of the “as of May 1, 1973” contract. II. The Change in Credit Terms in the 1974-75 Contract Bray Oil also claims that the district court erred in finding that a change in credit terms in the 1974-75 con- tract from a consignment arrangement to a fixed payment schedule did not violate 10 C.F.R. § 210.62(a). Our hold- ing as to the validity of the release, however, makes it clear that Bray Oil would be barred from recovering any damages realized prior to the date of the release arising from the change in credit terms. For the same reasons noted above regarding overcharge claims based upon an improper classification, we hold that the release has pro- spective effect to bar recovery for any damages stemming from the change in credit terms in the 1974-75 contract. See Shell Oil Co. v. Nelson Oil Co., 627 F.2d 228, 236 (Temp. Emer. Ct. App.) (cause of action for change in credit terms accrues when acts constituting challenged change occurred), cert. denied, 449 U.S. 1022 (1980). In view of our holding that plaintiffs released their claim for overcharge damages realized in each of the three contract years in question, we vacate the district court’s award of prejudgment interest, penalty damages, attor- neys’ fees and other expenses. The judgment below is affirmed in part and reversed in part and che matter remanded to the district court for entry of final judgment in favor of the defendants. 18 1 HOFFMAN, Judge, concurring in part and dissenting in part: While I agree with the majority as to the principal points discussed in the opinion, I do not agree with the discussion in part I-C relating to the Scope of the Release. The Release is quoted verbatim in footnote 2 of the opinion and will not be repeated in detail. The Release, executed on October 14, 1975, mutually releases any “causes of action which each may have or which each may allege to have had against the other aris- ing out of actions, agreements, contracts, commitments, relationships or action taken or omitted to be taken up to the date hereof based on tort, contract, negligence, anti- trust or violation of State or Federal Regulations exclud- ing, however, the following: [C] Obligations undertaken by Chevron and/or | Bray arising out of Agreements executed on or after this date in the resolution of past differences. The Release continues: Bray, by its execution hereof, acknowledges the va- lidity of certain arrangements entered into between it and Chevron dated as of May 1, 1973 and as of May 1, 1974 relating to the purchase and sale of petroleum products. This Release does not refer to future violations by Chevron, concerning which the majority opinion has held are barred by the release. While it is true that the Re- lease acknowledges that the 1973 and 1974 arrangements were valid, both the district court and the majority opin- ion have held to the contrary. In my opinion, the district court correctly construed the Release, and its judgment should be affirmed in every respect. To hold, as does the majority, that a continued violation by Chevron after October 14, 1975, is permissi- 19 2 ble and bars the victim from a right of action, would, in my view, be contrary to public policy. The majority relies upon Western Mountain Oil, Inc. »v. Gulf Oil Corp., 726 F.2d 765 (Temp. Emer. Ct. App. 1983), for the proposition that the cause of action ac- crues at the time of the original improper classification. Western Mountain, however, is clearly distinguishable from the case at bar. In Western Mountain, the plaintiff brought suit on a claim of having been overcharged. The court ruled that the claim was barred by the statute of limitations. There was only one three-year contract in- volved: and the plaintiff brought suit after the contract expired. The plaintiff in that case had argued that each delivery of petroleum constituted a violation. The Western Mountain court held that the cause of action accrued when the overcharging commenced at the beginning of the contract. The policy underlying the statute of limitations sup- ports the conclusion in Western Mountain. If it is deemed to be a separate violation each time any petroleum is delivered, then a company would be forced to re-examine its classification of each purchasers each time there is a delivery. This would be an onerous burden to impose upon the companies. It is at the time of contracting that the supplier classifies the purchaser. In the case’ sub judice there were three separate con- tracts. The contract term which placed Bray in the wrong class of purchasers first appeared in the 1973-74 contract. This term was repeated in the two subsequent contracts. We are only concerned with the last contract covering the 1 The other cases cited by the majority, Fleetwing Corp. v. Mobil Oil Corp., 726 F.2d 768 (Temp. Emer. Ct. App. 1983), and Lerner v. Atlantic Richfield Co., 731 F.2d 898 (Temp. Emer. Ct. App. 1984), do not state whether there was more than one contract involved. Furthermore, they merely rely upon Western Mountain on this issue. 20 EE EO EEO EEE EE EEE EOE EEO OEE EOE OEE OE EE EE EE 3 year 1975-76. The release was signed on October 14, 1975 at the same time the 1975-76 contract was signed. The cause of action for overcharges in the 1975-76 con- tract year accrued at the beginning of the contract. In that contract Chevron improperly classified Bray which resulted in Bray being overcharged during the term of the contract. It was at the time of contracting that the price terms were established which would be in effect for 1975-76. Chevron was obligated not to charge a price which exceeded the maximum lawful price under the regulations. The previous contracts had no legal force beyond their expiration. The fact that Chevron had com- mitted the same type of violation in those previous con- tracts is irrelevant. At the time the 1975-76 contract was agreed upon, Chevron’s negotiators specifically con- sidered the price terms of the 1975-76 contract. This is unlike the purely ministerial task of shipping quantities of petroleum according to the terms of the contract found in Western Mountain. { A release of future violations is, without question, void against public policy. Pearlstein v. Scudder & German, 429 F.2d 1136 (2d Cir. 1970), cert. demed, 401 U.S. 1013 (1971); Oberweis Dairy, Inc. v. Associated Milk Pro- ducers, Inc., 568 F. Supp. 1096 (N.D. Ill. 1988); Wein- raub v. International Banknote Company, Inc., 422 F. Supp. 856 (S.D. N.Y. 1976); Korn v. Franchard Corp., 388 F. Supp. 13826 (S.D. N.Y. 1975). If the release is held to bar Bray’s claims for the 1975-76 contract years, it would allow companies to absolve themselves of all future violations by having the purchaser sign a release of a similar past violation. For this reason, I would affirm Judge Holden’s decision. 21 TEMPORARY EMERGENCY COURT Oi" APPEALS OF THE UNITED STATES No. 2-45 NORTHERN OIL COMPANY, INC. , BRAY OIL COMPANY, INC., NORTHERN TERMINALS, INC., and DANA S. BRAY, Plaintiffs-Appellants, Vv. STANDARD OIL COMPANY OF CALIFORNIA and CHEVRON, U.S.A., INC., Defendants-Appellees. Before HOFFMAN, GIGNOUX, and METZNER, Judges. ORDER Upon consideration of the Petition for Rehearing and/or Suggestion for Rehearing En Eanc filed by Appellants Northern Oil Company, Inc. et al., IT IS HEREBY ORDERED that the Petition for Rehearing is DENIED. IT IS FURTHER ORDERED that the Suaqestion for Rehearing En Banc is DENIED. The mandate is to issue May 1, 1985. FOR THE COURT: Donna M. Bold, Clerk by: April 24, 1985 Karen S. Berky Deputy Clerk 22 UNITED STATES DISTRICT COURT FOR TH= DISTRICT OF VERMONT Northern 011 Company, Inc. Bray Oil Company, Inc., ) Northern Terminals, Inc.,) and Dana S. Bray ) Civil Action Vv. _ Standard Oil Company of Tile No. 78-231 California and Chevron U.S.A., Inc. — ee eee ee MEMORANDUM OF DECISION I. Motion to Reconsider Effect of Release Following the close of all the evidence in this cause, on the issues of liability and damaces, the defendants Standard Oil Company of California ("SeCal]/ and Chevron U.S.A., Inc. ("Chevron"), by repetitive requests, ask reconsideration of the court's earlier ruling on the prospective amplication of the release between the parties dated October 14, 1975. The re- lease was executed contemporaneously with the con- tract for the supply of middle distillates for the ensuing contract year, May 1, 1975 through June 30, 1976. The target of the defendants’ present motion is the court's ruling to the effect that The release executed by Bray barred matured claims then accrued; it did not bar claims that might arise from future violations of federal law. Northern Oil Co. v. Standard Oil Co., No. 78-231, 23 Memorandum of Decision (D.Vt. filed October 5, 1983) ,at 22. One of the reasons advanced in the first motion to reconsider was that the defendants had no on- portunity to brief this asnect of the court's deci- sion. The defendants have now had the opportunity to brief the question anew to include two recent decisions of the Temporary Emergency Court of Appeals entered on December 22, 1983. The court is not persuaded that the mutual re- leases exchanged on October 14, 1975 foreclosed recovery of damages under Section 210 of the Eco- nomic Stabilization Act, 12 U.S.C. sec.1904 note, incorporated by reference in the Emergency Petro- leum Allocation Act, 15 U.S.C. sec.754(a) (1). to assion this consequence in futuro,to paraphrase from Judge Waterman's opinion in Pearlstein v. Skudéer & German, 429 F.2d 1136 (2d Cir.1970), cert. denied, 401 U.S.1013 (1971), would serve only to legalize the very conduct which the regulations seek to prevent and which suits such as this one serve to discipline. The court reads nothing in the authorities advanced by the defendants to justify giving the release curative and prospective effect capable of discharging liability for overcharges under a new supply contract that was awaiting performance. The defendants’ most recent request for reconsid- eration was apparently renewed on the basis of two recent, and as yet unreported, decisions by the Temporary Emergency Court of Appeals: Western Mountain Oil Inc. v. Gulf Oil Corp., No. 9-76, slinp.op. (Temp.Emer.Ct.App.December 22, 1983) and Fleetwing Corp. v. Mobil Oil Corp., No. 11-5, Slip.op. (Temp.Emer.Ct.App. December 22, 1983). These appeals, as their precedents, Siegel Oil Co. v. Gulf Oil Corp., 701 F.2d 149 (Temp.Emer.Ct.App. 1983), and Shell Oil Co. v. Nelson Oil Co., Inc., 627 F.2d 228 (Temp.Emer.Ct.App.), cert. denied, 449 U.S. 1022 (1980), were concerned with limitation of actions under applicable state statutes of limitation Each of these authorities rejected the "continuing violation" theory and turned aside the concept that each new supply of product gave rise to a separate cause of action. Western Mountain was an action to recover for overcharges for product sold under an agreement by Gulf to supoly Western Mountain with unbranded gasoline from January 1, 1974 through December 31, 1976. There, as in the present action, the claim against the supplier is for overcharges which re- sulted "from Gulf placing Western Mountain in an improper class of purchaser and calculating its May 15, 1973 transaction prices based on that improper 25 classification." The apnellate court affirmed the district court's application of the Nevada statute of limitation from the date the cause of action accrued. As the district court correctly found, all of the requirements for accrual of appellant's cause of action under the facts of this case had been met on January 1, 1974, the date the overcharging commenced as a result of this misclassification. Id., slip.op. at 6. Accord, Fleetwing, supra, slip op. at 4. The defendants translate the text just quoted from Western Mountain to mean that all of Bray's claims based on misclassification accrued when the misclassification occurred in 1973. Application of the release in the fashion that the statute of limitations was applied in the cases cited would release the overcharges derived from the final supply agreement of 1975-76. Since this court's opinion of October 5, 1983 held that the October 14, 1975 release barred matured claims then ac- crued, the defendants urge that the court's prior holding necessarily barred all plaintiffs’ claims for overcharges imposed thereafter. While the argument has some surface appeal, it ignores the particular language of the 1975 re- lease agreement which carves out three exceptions from its operation and effect. One of these exclusions is 26 Obligations undertaken by Chevron and/or Bray arising out of Agreements executed on or after this date in the resolution of past differences. It seems clear enough to the court that over- charges resulting from a misclassification grounded in fraud which was carried forward to the sunply agreement "executed on or after" October 14, 1975 were not extinguished. While the release pvurported to compromise any claims of fraud that attended the prior arrange- ments "as of May 1, 1973 and as of May 1, 1974," it specifically excluded the contract relating to sale and purchase of petroleum products executed on or after the date of the settlement. For the reasons outlined above, the court confirms its prior ruling that the release exchanged by the parties on October 14, 1975 extinguished past claims but cannot be applied to foreclose overcharges im- posed under the suvvly agreement for the ensuing contract year. To apoly the release prospectively to bar this private action under Section 210 of the Economic Stabilization Act would offend public policy in equivalent degree to that which attends prospec- tive release of a statutory action under the securi- ties and antitrust laws. See Redels, Inc. v. General Electric Co., 498 F.2d 95, 99 (5th Cir.1974) (Releases may not absolve party from liability for future 27 violations of antitrust laws); Pearlstein v. Skudder & German, supra, 429 F.2d at 1136; Hunt v. Mobil Oil Corp., 410 F. Supp. 10, 27 n. 59 (S.D.N.Y.1975) (Weinfeld, J.), aff'd, 550 F.2d 68 (2d Cir.), cert. denied, 434 U.S. 984 (1977) ("An agreement to waive future antitrust violations would be contrary to public policy."”); Westmoreland Asbestos Co. v. Johns-Manville Corp., 39 F. Supp. 117, 119 (S.D.N.Y.), aff'd, 136 F.2d 844 (2d Cir. 1943) (Release designed to absolve future violations of federal law would be void as against public policy). In this instance the language of the re- lease against prospective application is in step with sound consideration of public policy. To give the effect urged by the defendants to the release would undermine a principal objective of the regulatory scheme, which ..-wasS to maintain the supplier- purchaser relationships as they existed in 1972-73, prior to the statutory regulation of the petroleum industry. Mobil Oil Corp., et al. v. Dept. of Energy, et al., Nos. 2-40 and 6-31, slip op. at 5 (Temp. Emer. Ct. App. December 20, 1983). The court's prior ruling precluding prospective application of the release of October 14, 1975 will stand. 28 II. The Cost Bank Defense Since the closing days of the liability phase of this controversy the defendants have stoutly contended that the Bray Companies' entitlement to danuges, by way of overcharges under the final con- tract, are insulated and washed away by unrecouped banked costs, the so-called "cost bank" defense. The defendants advance the argument: An overcharge by definition is a price that exceeds the 'maximm allowable price’. 10 C.F.R.sec. 212.83(a) (1). A orice to a cus*omer exceeds the maximum allowable p_ice only if that price is greater than the May 15, 1973 base price to that customer's class of purchaser plus the increased costs incurred by the seller since May 15, 1973. 10 C.F.R. sec.212.82. Defendants’ Memorandum in Support of Chevron's Motion to Dismiss, dated December 12, 1983, at 1-2 (empr.asis in text). The regulation last cited provides: "Maximum allowable price’ means the weighted average price at which the covered product was lawfully priced ‘in transactions with the class 2f pvur- chaser concerned on May 15, 1973, com- puted in accordance with the provisions of Section 212.83(a), plus increased product costs and increased non-pvroduct costs incurred between the month of measurement and the month of May 1973. 29 10 C.F.R. sec.212.82. On the strength of these regulatory provisions, the gist of the argument is that Chevron's unrecouped inc’eased costs, as shown in the cost bank balance for each month between October 1975 and the date middle distillates were decontrolled, satisfied the amounts claimed by the plaintiffs for overcharges. Thus, it is claimed that the price increases charged are offset by the costs which Chevron was entitled to pass through to Bray during the relevant time period. The defendants press the point that since they, as refiners, withheld passing through the increased costs to the plaintiffs, the cost bank balances eliminate the overcharges that are claimed under the 1975-76 supply contract. The overcharge problem that consumed weeks of trial time does not lend itself to such simplistic analysis and easy resolution. Regulatory Framework The statutory and regulatory background is well described in Standard Oil Gg. v. Department of Energy, 596 F.2d 1029 (Temp.Emer,.Ct.App. 1978): On August 19, 1973 the CIC [Cost of “Living Council] added Subpart L-Petroleum and Petroleum Products- to the Phase IV regulations, which established special rules governing the pricing of petroleum products. The key to this pricing structure was the 'base price’, which was défined as the May 15, 1973 selling price plus adjustments for the in- creased costs of imports and domestic 30 crude petroleum above the May 15 price. This definition, which differed sub- stantially from that in the proposed regulations, allowed refiners to pass through their product cost increases on a dollar for dollar basis without being subject to ore-notification re- quirements or a profit margin rule. As to non-product costs, refiners could make price increases above base price to reflect these costs, but they re- mained subject to pre-notification and profit margin limitations. As initially promulgated, the pet- roleum price regulations did not pro- vide that either product cost increases or non-product increases unrecoupned in one month could be carried forward, or ‘banked', for use in the oricing equation for establishing prices in a later month. Id. at 1035 (footnote omitted). More recently this regulatory background has been reviewed and confirmed in Mobil Oil Corp., et al., v. Dept. of Energy, et al., supra, slip op. at 4-5 and Med, The de The so-called "cost bank" rule was added to this regulatory structure on September 18, 1973, allowing refiners to carry over, or "bank," unrecovered in- creased product costs for inclusion in the calculatinm of base prices in a later month. 38 Fed.Reg. 25686, 25688 (Sept. 14, 1973). Banked costs would be reducd correspondingly whenever a refiner added previously unrecouped costs to its current price. "(T]he banking provisions had given refiners a mechanism with which to smooth out price adjustments over a 31 period of time." Standard Oil Co. v. Dept. of Energy, supra, 596 F. 2d at 1036. Because the initial cost bank rule created some con- fusion, it was amended in November, 1973, to clarify that if the prices charged for a particular product failed to yield sufficient revenues to recoup all the product's cost increases, the refiner could bank the unrecouped costs for use in computing base prices in a subsequent month. 38 Fed.Reg. 30271 (Nov.2, 1973). The banking provisions were continually amended between 1973 and 1976. For the most part, these amendments are not material to resolution of the issue before the court. Of significance, however, is a September, 1974 amendment that has been referred to as the "equal application" or "deemed recovery" rule. 39 Fed.Reg.32306 (Sept.5, 1974). The rule required refiners to pass through increased product costs uniformly among all classes of purchaser or suffer a cost recovery penalty. Specifically, the largest cost increase passed through to one class was deemed to have been passed through to each of that refiner's other classes 6f purchaser for purposes oz cost bank depletion. Because the rule was initially promulgated with- out prior notice and comment in reliance on the "good cause" exception to this procedural require- ment, its validity was questioned. On December 21, 1983, the Temporary Emergency Court of Appeals 32 a ruled that the September 5, 1974 promulgation and the December 5, 1974 repromulgation of the deemed re- covery rule were procedurally valid. Mobil Oil Corp. et al. v. Dept. of Energy, et al., suvora, slip op. at 34, 39. Other amendments in November, 1974, restricted the amount of banked product costs which could be used to increase the base price in a particular month to ten percent of the total amount of unrecouned increased product costs available for pass through. 39 Fed.Reo. 39259-39261 (Nov.6, 1974). In proposing these amend- ments, the Federal Energy Administration ("FEA") exp- ressed its concern that the enormous accumulated banks of unrecouped costs of some refiners would not ultim: ately serve to further the provisions' goals: The FEA has also concluded that the banking provisions should be substantially restricted in the future. The intent of the price regulations was never to guarantee into the indefinite future that refiners would be able ultimately to pass throuch the total amount of their in- creasec product costs, without regard to market conditions. Rather, it was intended only to afford refiners the opportunity to pass through increased product costs on a reasonably current basis. 39 Fed. Reg. 32718, 32724 (Sept. 10, 1974). Further developments in the cost bank amendments are set forth in the margin.+ 33 Discussion The court returns to defendants' contention that the balance of unrecouped banked costs constitutes a full defense to this private action under Section 210(b) to bar liability for any overcharge violations. They maintain that even applying the deemed recovery penalty, Chevron still has a positive cost bank balance during the period between October, 1975, and the end of price controls on middle distillates. After careful consideration, the court denies Chevron's motion to dismiss based on the sufficiency of umrecouped costs in the Chevron cost bank to support the price increases to the Bray Companies. The court holds as a matter of law that cost bank credits cannot be used to offset overcharge violations, which were found to exist in the liability phase of this case and which are discussed in subsequent parts of this opinion. In urging the cost bank defense, the defendants place some reliance on the district court decision in Eastern Airlines, Inc. v. Mobil Oil Corp., 512 F.Supp.1231 (S.D.Fla.1981), rev'd, 577 F.2d 879 (Temp.Emer.Ct.App.1982). It appears that the appellate court did not reach Eastern's challenge to the district court's ruling on the cost bank. Eastern Airlines, Inc. v. Mobil Oil Corp., 677 F.2d 879, 881-82 (Temp.Emer.Ct.App. 1982). And in Pacific Service Stations Co. v. Mobil Oil Corp., 689 F.2d 34 1055 (Temp.Emer.Ct.App.1982), cited by defendants, the court of appeals reversed the district court's summary judgment holding for Mobil, noting that "appellants appear to concede” that the cost bank would provide a defense to overcharges. Id. at 1065. Neither case squarely held that the district court had been correct in treating the sufficiency of a cost bank as an absolute defense. The histo.y of the price rules teaches that the "cost bank" implementation was principally designed to assist in restoring competition to make »~sance at Perth Amboy. Nonetheless, SoCal did maintain elaborate administrative procedures to avoid overcharges. The network of screening mechanisms was insufficient, however, to screen out deceptive or coercive conduct in the bargaining process. And, of course, the complex regulatory framework, coupled with the thicket of facts that composes the background of this controversy, made the detection of the wrongdoing more difficult. Conclusions The parties agree as to the applicable law. Section 210(b) of the Economic Stabilization Act permits the imposition of attorneys' fees and penalty damages of up to three times the amount of the overcharges for willful conduct, except where the defendant establishes that the overcharge was not intentional but rather resulted from a bona fide error notwithstanding the maintenance of procedures reasonable adapted to the avoidance of such error. Both parties cite Eastern Air Lines, Inc. v. Atlantic Richfield Co., 712 F.2d 1402 (Temp. Emer. 60 Ct. App. 1983), in pressing their positions with respect to the imposition of additional sanctions. This recent opinion by the Termporary Emergency Court of Appeals orovides guidance for district court determinations on the award of penalty damages under Section 210. | After examining the Economic Stabilization Act's legislative history, the court assigned the burden of proof to the seller who imoosed the overcharges: [T]o deprive the court of its discretionary “power to award treble damages and attorney's fees, the defendant making the overcharge must prove that (1) the overcharge was not intentional, and (2) the overcharge resulted from a bona fide error notwith- standing (3) the maintenance by the defendant of procedures reasonably adapted to the avoidance of such error. In the absence of such proof by the defendart the court in its discretion may award treble damages and attorney's fees if it finds the overcharge was intentional or resulted from reprehensible or criminal conduct, or lack of procedures reasonably adapted to the avoidance of erroneous overcharges, or bad faith, or where required by equity and the ends of justice. Id. at 1412. The court then affirmed the cenial of penalty damages based uvon the district court's find- ing that the defendant ARCO had vroved that the over- 61 charges were unintentional and that ARCO had acted in good faith and maintained procedures reasonably adapted to the avoidance of overcharges. Id. In measuring the standard of proof required for the imposition of statutory sanctions, the appellate court has held that recovery of treble damages for violation of petroleum pricing regulations requires more demanding proof of additional elements than that for an award of’ conpensatory relief. See, e.g., Ashland Oil Co. v. Union Oil Co., 567 F.2d 984, 990(Temp. Emer, Ct. App.), cert. denied, 435 U.S. 927 (1977). It was held in Longview Refining Co. v. Shore, 554 F.2d 1006 (Temp. Emer. Ct. Appv.), cert. denied, 434 U.S. 836 (1977). [T]o establish a willful overcharge there must be an intentional violation of a known legal duty, that is to say, to be willful an overcharge must have been made with the specific intention of charging a price which the defendant knew was in excess of the ceiling price allowable under the applicable pricing law and regu- lations. kkk [T]here must be clear and convincing proof that an overcharge was willful when a claim for the amount of the overcharge was not presented to the defendant prior to bringing an action for the overcharge. 62 Id. at 1014. Additionally, the court held that negligence is insufficient to establish a violation. Id. The plaintiffs' reliance on Napnh-Sol Refining Co. v. Cities Service Oil Co., supra, is well placed. In that case, an indenendent petroleum marketer sued Cities Service Oil Company for treble damages and attomeys' fees arising from alleged gasoline sale overcharges that exceeded the Department of Energy's mandatory vetroleum vrice regulations. In denying the defendant's summary judanent motion, the court concluded that there was sufficient evidence to enable the trier of fact to conclude that Cities' conduct was intentional and did not result from "a bona fide error notwithstanding the maintenance of procedures reasonably adaoted to the avoidance of such error." Id. at 902.11 Here the justification for the award of additional statutory sanctions resides primarily in the over- charges imoosed after the exchange of mutual releases in October, 1975. Yet, the underpinning of these overcharges is entrenched in the deceptive and wrong- ful conduct on the vart of Chevron's Pfefferkorn who, according to the jury's verdict, induced the retro- active effective date of the "as of May 1, 1973" contract. 63 The evidence is clear and convincing that by this device Chevron was striving for financial gains that otherwise could be stifled if the 196€ contract became the basis for calculation of the maximum allowable price under the federal pricing regulations. The proof leads to the conclusion that Chevron's marketing representative acted with the specific intention of inducing a change in contract terms to a pricing formula that exceeded the ceiling price defined in the applicable regulations prevailing during the relevant time period. SoCal, on the other hand, although eagerly engaged in the pursuit of increased profit realization, did not participate in the wrongful misrepresentation on the part of Chevron's marketing representative. ScCal's fault lies in its failure to probe into the deceptive foundation upon which Chevron's classi- cation was based. Reliance on the teaching of Eastern Air Lines, Inc. v. Atlantic Richfield Co., supra, 712 F.2d at 1410-1412, and Longview Refining Co. v. Shore, supra, 554 F.2d at 1012-1014, leads the court to hold that, on the evidence presented, the plaintiffs are entitled to recover the amount cf $210,000 from the defendants for overcharges. An additional $210,000 for willful. imposition of overcharges will be assessed by way of statutory 64 sanctions against defendant Chevron U.S.A., Inc., alone, bringing the plaintiffs’ recovery to $420,000. Additicnally, the court will make an apportionment of reasonable attormeys' fees at one-half of the total exvense incurred by the plaintiffs. In making this adjustment, the court is guided by Hensley et al. v. Eckerhart et al., U.S. __, 103 S.Ct. 1933 (1983), which clarified the principles for the exercise of the court's discretion in awarding attorney's fees. In Hensley, the Supreme Court declared that a prevailing plaintiff's “degree of success” is the “most critical factor” to be weighed by the district court in determining a reasonable attorney's fee. 103 S.Ct. at 1941. The Court explained that "(iJf .. .a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount.” Id. The court concluded that "[a] reduced fee is aporopriate if the relief, however significant, is limited in comparison to the scope of the litigation as a whole.” Id., 103 S.Ct. at 1943. Hence, the district court may reduce the fee award below the lodestar figure by either identifying “svecific hours that should be eliminated,” or by merely deducting a fixed amount or vercentage from the lodestar “to account for the limited success." Id., 103 S.Ct. at 1941. 65 Applying these principles to the case at bar, the court concludes that a one-half reduction of total fees fairly represents plaintiffs’ success on the merits, while precluding recovery of litigation costs on issues on which the defendants prevailed. More svecifically, the apportionment is based on the plaintiffs’ failure to prevail on the issues of rescission of the mutual release of October 14, 1975, and on the Green Mountain Petroleum transaction, which justified the change in credit terms in the 1974-75 supply agreement. Against these recoveries by the plaintiffs, the defendant Chevron is entitled to recover the amount of $1,805,751.13 from the plaintiffs on its counterclaim, as reduced according to stipulation by the parties. The clerk is directed to enter judgment on the special verdict of the jury, the court's earlier decisions of July 27 and October 5, 1983, and the findings of fact and conclusions of law stated and considered herein. Rule 58 of the Federal Rules of Civil Procedure directs that "[e]ntry of the judgment shall not be delayed for the taxing of cost&?" Accordingly, the clerk will enter final judgment in accordance with the views and amounts stated in this decision without awaiting allowance of costs, including attorneys’ fees. This issue will be determined in separate, supplemental proceedings to follow. It is so ORDERED. Dated at Rutland, in the District of Vermont, this 17th day of February, 1984. James S. Holden Unitee States Senior District Judge FOOTNOTES On November 29, 1974, the FEA issued further amendments to the vetroleum pricinc requla- tions... [I]t for the first time adopted an explicit rule that increased non-product costs not recouped in the current month could not be carried forward for use in computing allowable prices in excess of base prices in any subsequent month. $212.83 (e) (4); 39 Fed. Reg. at 42372. These amendments took effect on January 1, 1975. - Standard Oil Co. v. Dept. of Energy, suora, 596 F.2d at 1037. 67 2 Throughout the course of this litigation, New York Harbor Cargo class has been variously referred to as New York Harbor Barge Buyer class. : 3 The varties' stipulation concerning calculation of overcharges in the agreed amount of $210,000 Goes not extend to any subsequent proceedings that may be directed upon apoellate review of these proceedings. 4 Northern Oil Co. v. Standard Oil Co., No. 78-231, D.Vt., Partial Transcript of Damages Hearing, December 13, 1983, at 2-3. 5 Defendants’ Proposed Order on Rule 16 Conference at 9, Northern Oil Co. v. Standard Oil Co., No. 78- 231, D.Vt., filed December 7, 1983. 6 Id. at 10. 7 Accordingly, although Chevron has no Obligation to do so Chevron hereby acrees that, if you signify your desire as here- inafter provided for us to supply you for such reasonable period beyond May 31, 1973, we are willing to do so under the following terms and conditions. kh B) We shall supply you with up to, but not in excess of, 70,000 barrels per month of No. 2 heating fuel and up to, but not in excess of, 7,000 barrels per month of kerosene, but not to exceed in the aggregate 400,000 barrels of both products delivered to all locations under said Contracts (which phrase shall be deemed to include deliveries to Fort Anne, New York and Burlington, Vermont, as well as deliveries 68 EDITOR'S NOTE THE FOLLOWING PAGES WERE POOR HARD COPY AT THE TIME OF FILMING. IF AND WHEN A BETTER COPY CAN BE OBTAINED, A NEW FICHE WILL BE ISSUED. (A of any products hereunder into tank trucks at Rensselaer, New York under the afore- said letters of authorization) under the pvrovisions thereof, excenting those pvrovi- sions relating to the orices for such oroducts, which shall be as set forth below and except as herein otherwise vorovided.’ The orice to you for such No. 2 heating fuel and kerosene as you may elect to purchase uncer the provisions of this Letter Agreement, including (1) anv vortion of said quantities delivered by water transport to you on or after the ovening of the New York State Barsoe Canal to navigation and (2) any product lost or contaminated at Rensselaer, New York shall for each location be the higher of the followina: 1) The price formlae as set forth in said Contracts, or 2) Chevroen's posted New York arbor Cargo price for such products in effect on Gate of Gelivery plus all of Chevron's reiated sunply costs to each such location, vrovided that such orices shall in no event exceed the maximm vrices for such products permitted under any economic controls program then in effect. kee D) The extension of the period of said Contracts as herein provided is contingent upon (a) your accounts beino current within the credit terms of said Contracts on May 3], 1973 and (b) your obligations under those certain bank loan agreements as to which Chevron is guarantor being current on May 31, 1973. xk If you desire a continued supply of pro- ducts uncer terms and conditions herein- above set forth, please confirm the same in the space provided below and return the carbon copy to us by January 31, 1973. Very truly yours, CHEVRON OI], COMPANY By /s/ E. S. Pfefferkorn E. S. Pfefferkom Confirmed: BRAY OIL COMPANY, INC. BRAY TERMINALS By By NORTHERN OIL COMPANY, Inc. By DANA S. BRAY Plaintiffs’ Exhibit 58, December 26, 19372, letter from Chevron to Bray Companies. See generally testimony of Melvin Goldstein, December 14, 1982 trial transcript. Testimony of George Wyllie, December 19, 1983 trial transcript, at 29, 34. 70 10 Kaiser devosition read into evidence: Q. So, you were the only one involved in making the decision that Bray should be put into a varticular class? A. That's correct. Q. By anyone, I meant anyone at Perth Amboy in that last question. Is your answer still the same? A. Yes. Q. “as there anyone in San Francisco in 1971 who was involved in the decision with respect to what class of ourchaser Brav should be placed in? BR. I don't think it was even discussed with them. We're now referring to 1971? Q. Correct. A. Yes. August 3, 1982 trial transcript, at 27. 11 Such evidence included the following: (i) Cities refused to continue the historic pricing similarity amona Naph- Sol, Osceola and Tulsa, reflected in Cities, customer codes, revised recently before the Regulations were »oromulgated. (ii) Cities refused to preserve customary price differentials between Naph-Sol and ‘branded distributors.’ 71 (iii) Cities vlaced Naph-Sol in a legally spurious class of purchaser known as ‘unbranded resellers-non-contract. ' (iv) Cities uses fictitious transactions in the Northeast and the South to determine its prices to Naoh-Sol in the Upper Mid- west. (v) After the close of discovery in this case, and when faced with Naph-Sol's motion for partial summary jiudgment, Cities attempted to rearrange its classes of purchaser so as to wipe out the "Osceola' and 'Tulsa' classes, in which Naph-Sol contended it belonged. (vi) As part of this scheme, Cities attempted to structure its classes of purchaser in such a manner as to conceal the fact that on or immediately before May 15, 1973, both Osceola and Tulsa were charged lower orices than were branded distributors. (vil) As a further part of this scheme, Cities attempted to charce Naph-Sol. the same prices that Cities charged to substantially dissimilar customers. (viii) Cities attempted to obtain DOE's aporoval of a class of purchaser scheme which would ratify Cities' pricing basis with respect to Naph-Sol. Naph-Sol Refining Co. v. Cities Service Oil Co., supra, 495 F. Supp. a*. 902-903. 72 12 For cases construing this orovision of Fed. R. Civ. P. 58, see Richards v. Gov't of the Virgin Islands, 579 F.2d 830, 833 (3d Cir. 1978) ("Costs" construed to include counsel fees); Danzig v. Virgin Isle Hotel, Inc., 278 F.2d 580, 582 (3d Cir. 1960) (“The postvonement of judgment until after the amount of costs can be determined is contrary to the letter and purpose of Rule 58."); and Maryland and Casualty Co. v. Jacobson, 37 *.R.D. 427, 430 (W.D. Mo. 1965) ("It is clear, however, that the Rules of Civil Procedure now exoressly recognize that the entry of a judgment and the taxation of costs ar [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_IA40385018_0264%3A1. Public record. Not legal advice.