Respondents Brief — Clark Oil Co. v. Phillips Petroleum Co.

IN THE

Supreme Court of the United States_

Ocroser Term, A. D. 1945.

No.216

CLARK OIL COMPANY axp PLYMOUTHIL CLARK OIL

COMPANY,

Petitioners,

vs,

PHILLIPS PETROLEUM COMPANY, er at.,

Respondents.

BRIEF OF RESPONDENTS, PHILLIPS PETROLEUM

COMPANY, THE PURE OIL COMPANY, SINCLAIR

REFINING COMPANY, SHELL OIL COMPANY, INC.,

SOCONY-VACUUM OIL COMPANY, INC., SKELLY

OIL COMPANY, CONTINENTAL OIL COMPANY,

AND CITIES SERVICE OIL COMPANY, IN

OPPOSITION TO THE PETITION FOR WRIT OF

CERTIORARI.

DAVID T. SEARLS,

VINSON, ELKINS, WEEMS & FRANCIS,

Esperson Building,

Houston, Texas,

G. AARON YOUNGQUIST,

FOWLER, YOUNGQUIST, FURBER, TANEY & JOHNSON,

Northwestern Banking Building,

Minneapolis, Minnesota,

Attorneys for Respondents, Phillips Petroleum

Company, The Pure Oil Company, Sinclair

Refining Company, Shell Oil Company, Ince.,

Socony-Vacuum Oil Company, Inc, Skelly Oil

Company, Continental Oil Company, and Cities

Service Oil Company,

ee

a A a 5 Bd

OE ae PE EN TEE

an

I. This Court Should Not Grant the Petition for

Writ of Certiorari Because the Finding of Fact

of Both the Trial Court and Circuit Court of

Appeals That Petitioners Sustained No Damage

Is Supported by the Undisputed Facts.....---

A. Petitioners Admitted at the Pre-Trial Hear-

ing That They Were Not Claiming Any

Lessening in Their Margins. ........++++++

B. Petitioners Had the Protection of the Guar-

anteed Margin Provision of Their Contract.

(. The Increase in Petitioners’ Buying P.ice

Was Passed on by a Like Increase in Their

Selling Price .........0seseeeeeee eet eeees

Il. The Petition for Writ of Certiorari Should Be

Denied Because Petitioners’ Contention That a

Person Is Entitled to Recover Under the Clay-

ton Act Treble the Amount of Any Increase in

Price Resulting from a Conspiracy, Irrespec-

tive of Pecuniary Loss in Business or Property,

Has Been Decided Already by the Supreme

Court Adversely to This Contention.........-.

III. There Is-No Conflict Between the Decision in the

Present Case and That of the Second Cirenuit.in

Straus, et al. v. Victor Talking Mach. Co., et al.,

Ip SOLANGE PO NERA REPRE NA PL EE TRENT ERLE YT eet

INDEX.

PAGE

Reference to Opinions of Lower Courts.....-+++++++> 1

Grounds of Jurisdiction. .........+++++ eee eeeeeeeees 1

Statement of the Case....... A ee ae tea eee 2

Summary of Argument.........-eeeeeeee eee ereeeees 5

Argument ........ccecececeeesenceenceeseceencners 8

10

10

ll

7

297 F. 791 (C. C. A. 2d, 1924), Because Straus

Had Sustained an Actual Pecuniary Loss in the

Amount of the Increase in Price to Him........ 14 |

. There Is No Conflict Between the Decision in

the Present Case and the Freight Rate Over-

charge Cases and Other Cases Relied Upon by

NE hac GA NN caw s Gu 009s Unindee Wat ceedes 15

A. The Tariff Overcharge Is Recoverable With-

out Showing a Pecuniary Loss and Is Recov-

erable by Only Persons in Privity With the

fo eee rey Serr Err oy Pere reer a a 16

B. Privity Is Not Essential to Recovery Under

the Antitrust Laws, and the Showing of

Pecaniary Loss Is Essential............... 17

. If Compliance With Rule 38 Is Jurisdictioral,

the Petition for Writ of Certiorari Should Re

Denied Because Petitioners Did Not Serve Re-

spondents With a Copy of the Record Within

Ten Days After the Filing in the Supreme Court 18

iii

TasLe or Cases Crrep.

Chattanooga Foundry and Pipe Works v. City of At-

lanta, 203 U. S. 390, 399, 27 S. Ct. 65, 51 L. Ed. 241

(2D0B). ncn cocunccvesssccvsecrssessesnvacs 6, 10, 14, 17

Davis v. Portland Seed Company, 264 U. 8S. 403, 44 S.

Ct. 380, 68 L. Ed. 762 (1924)... 2... 6... cece eee eee ee 17

Doughty-MeDonald Grocery Company, et al. v. Atchi-

son, Topeka & Santa Fe Railway Company, et al.,

155 TL. Cu. Cy. 47 (1989)... cc cs vnccccccncevcnceseces 16

Farmers Co-Op. Oil Co. v. Socony-Vacuum Oil Co.,

Inc., et al., 133 F. (2d) 101, 103 (C. C. A. 8th, 1942). 18

Foster & Kleiser Co. v. Special Site Sign Co., 85 F.

(2d) 742, 750 (C. C. A. 9th, 19386), certiorari denied

. fie & | eeereewre rere rs rere ry) the 14

Glenn Coal Co. v. Dickinson Fuel Co., et al., 72 F. (2d)

885, 887 (C. C. A. 4th, ol) See ee ee 14

Jack v. Armour & Co., et al., 291 F. 741, 745 (C. C. A.

Sth, 1923) .....ccccrccccccccescceeseeescceeenes 14

Keogh v. Chicago & Northwestern Railway Company,

et al., 260 U. S. 156, 164-165, 43 S. Ct. 47, 67 L. Ed.

1GB (1DBB) ow. ccrcncascesccssescscsscccccces 6, 7, 12, 17

Leonard v. Socony-Vacuum Oil Co., Inc., et al., 42 F.

Supp. 369, 370 (D. C., W. D. Wis., 1942)........-. 13

Locker, et al. v. American Tobacco Co., et al., 218 F.

447, 448 (C. C. A. 2d, 1914)... 6. e eee eee 14

Louisville & Nashville Railroad Co. v. Sloss-Sheffield

Steel & Iron Company, 269 U. 8. 217, 235, 46 S. Ct.

73, 70 L. Ed. 242 (1925)... 0... ee eee eee eee renee 16

Miller, H. E., Oil Co. v. Socony-Vacuum Oil Co., Ine.,

et al., 37 F. Supp. 831 (D. C., E. D. Mo., E. D., 1941) 13

Missouri Portland Cement Company v. Director Gen-

eral, as Agent, 88 I. C. C. 492, 495, 496 (1924)....... 16

>... SSAA OR ITO OIE IIS RENT IE EINE SM TE

lv

New York, N. H. & H. R. Co., et al. v. Ballou & Wright,

242 F. 862, 867 (C. C. A. 9th, 1917) ...........225e 16

Nicola, Stone & Myers Company v. Louisville & Nash-

ville Railroad Company, et al., 14 I. C. C. 199, 209

(MBG) ina cc cnewandsccccnscescvanestspcestecesees 16

Northwestern Oil Co. v. Socony-Vacuum Oil Co., Inc.,

et al., 138 F. (2d) 967 (C. C. A. 7th, 1943), certiorari

denied 321 U. S. 792. .........cceeecececnees 3, 6, 18, 15

Pennsylvania Railroad Company v. International Coal

Mining Company, 230 U. S. 184, 202-203, 206, 33

S. Ct. 893, 57 L. Ed. 1446 (1913)... . 2... 22 eee eee 12,17

Southern Pacific Company, et al. v. Darnell-Taenzer

Lumber Company, et al., 245 U. S. 531, 534, 38 S. Ct.

186, 62 L. Ed. 451 (1918) ...........-++5-- 5, 6, 11, 12, 16

Story Parchment Company v. Paterson Parchment

Paper Company, et al., 282 U. S. 555, 51 S. Ct. 248,

75 Le. BEd. 544 (1981)... n ccc ccccccvcvecccsecsece 17

Straus, et al. v. Victor Talking Mach. Co., et al., 297

F. 791 (C. C. A. 2d, 1924)... 22... cece eee ee eee eee 6, 14

Thomsen, et al. v. Cayser, et al., 243 U. S. 66, 37 S. Ct.

353, 61 L. Ed. 597 (1917)... 2... . 6. eee eee eee eee 17

Twin Ports Oil Co. v. Pure Oil Co., 119 F. (2d) 747

(C. C. A. 8th, 1941), certiorari denied 314 U. S. 644,

86 L. Ed. 77, rehearing denied 314 U. S. 711, 86 L. Ed.

EERE RE ROS 3, 6, 18, 15

United States v. Pink, 315 U. S. 203, 62 S. Ct. 552, 86

Se We eco caren eoneaeenbeees 9

United States v. Socony-Vacuum Oil Co., Inc., et al.,

310 U. S. 150, 192, 60 S. Ct. 811, 84 L. Ed. 1129

i es cpa g oe Sb de bn ROSASURA ERASER SD 2, 5,9

ERP LAT RRS RE TET TREE EINES EEL TERI NE NAR LS ON SE IT AS a

Sratrutes CIrep.

Clayton Act, October 15, 1914, ¢. 323, § 4, 38 Stat. 730;

Title 15 U. S. C. A. See. 15...... 1, 5, 10, 11, 12, 13, 16, 17

Interstate Commerce Act, Act of February 4, 1887,

Sees. 1, 2 and 4, 24 Stat. 379; Title 49 U. S. C. A.

Sees. 1, 2 and 4.........cccececeeceeeeees 6, 7, 12, 16, 17

Sherman Act, Act of July 2, 1890, c. 647, § 7, 26 Stat.

209; Title 15 U.S. C. A. See. Lo... cece eee eee ee ees 1,13

Rute Crrep.

Rule 38, Supreme Court Rules...........-.++++++++5 7,18

TOG eee

BAO

PLS

ete sot a

——— 20

EEL ANRS

IN THE

Supreme Court of the United States

Ocrosper Term, A. D. 1945.

No. 216

CLARK OIL COMPANY anp PLYMOUTH CLARK OIL

COMPANY,

Petitioners,

vs.

PHILLIPS PETROLEUM COMPANY, et At.,

Respondents.

BRIEF OF RESPONDENTS, PHILLIPS PETROLEUM

COMPANY, THE PURE OIL COMPANY, SINCLAIR

REFINING COMPANY, SHELL OIL COMPANY, INC.,

SOCONY-VACUUM OIL COMPANY, INC., SKELLY

OIL COMPANY, CONTINENTAL OIL COMPANY,

AND CITIES SERVICE OIL COMPANY, IN

OPPOSITION TO THE PETITION FOR WRIT OF

CERTIORARI.

The opinion of the Cireuit Court of Appeals appears on

| pages 135 to 142 of the Record, and is reported in 148 F.

(2d) 580 (April 11, 1945). The opinion of the District

Court appears on pages 114 to 126 of the record, and is

reported in 56 F. Supp. 569 (D. C. D. Minn., 3rd _ Div.,

1944).

Jurisdiction.

Petitioners assert that the jurisdiction of this Court is

| invoked on the ground that the case is based upon an

alleged violation of the Sherman and Clayton Anti-Trust

Acts. Act of July 2, 1890, 26 Stat. 209, 15 U. S. C. A.

Section 1; Act of October 15, 1914, 38 Stat. 730, 15 U. S.

C. A. Section 15 (petition for writ of certiorari, p. 1).

ae RETIRE NT :

Statement of the Case.

This action is brought by petitioners, Clark Oil Com-

pany and Plymouth Clark Oil Company, to recover under

the antitrust laws treble the damages alleged to have been

sustained by them as a result of the conspiracy for which

the respondents were convicted in United States v. Socony-

Vacuum Oil Co., Inc., et al., 310 U. S. 150 (1940) (Madison

Oil Case).

Petitioners allege in their complaint that they are job-

bers engaged in the business of buying and selling gaso-

line (R. 67); they further allege that they paid a higher

tank car price for gasoline during the years 1935 and 1936

as a result of the conspiracy charged in the Madison Oil

Case (R. 71); and they seek to recover treble the amount

of such increase in price irrespective of pecuniary damage

in their business or property (R. 112-113).

Petitioners’ purchase price was determined under a con-

tract with Phillips Petroleum Company which provided

that petitioners would be guaranteed a margin of 34¢ per

gallon on the gasoline bought and resold by them (R. 20).

Petitioners admitted at a pre-trial conference that they

were not claiming that they had sustained any lessening

in their margins on gasoline bought and resold, that their

claim of damages was in fact based on gasoline bought

and resold in the ordinary course of business, and that

they were seeking to recover treble the amount of the in-

crease in price paid by them under a so-called illegal

exaction theory, regardless whether such increase in price

resulted in a pecuniary loss in their business or property

(R. 112-113).

Respondents filed a motion for summary judgment,

which was based on certain exhibits, the pleadings and the

subsequent stipulations at the pre-trial conference (R. 76,

3

113). No affidavits were filed and no evidence was offered

by petitioners in opposition to this motion. Hon. Gunnar

H. Nordbye granted respondents’ motion and wrote an

opinion which appears at pages 114-126 of the Record,

and in 56 F. Supp. 569 (D. C. D. Minn., 3rd Div., 1944).

Judge Nordbye held:

(1) A jobber, who is engaged in the business of

buying and selling gasoline, is not entitled to recover

damages merely because there has been an increase in

the price of gasoline as a result of a conspiracy, but

he must show that he sustained a pecuniary loss as a

result of such increase in price.

(2) This principle was first enunciated in the so-

called treble damage oil cases by the Eighth Circuit

Court of Appeals in Twin Ports Oil Co. v. Pure Oil

Co., 119 F. (2d) 747 (C. C. A. 8th, 1941), certiorari

denied 314 U. S. 644, rehearing denied 314 U. S. 711,

and was followed by the Seventh Cireuit Court of

Appeals in Northwestern Oil Co. v. Socony-Vacuum

Oil Co., Inc., et al., 138 F. (2d) 967 (C. C. A. 7th, 1943),

certiorari denied 321 U. S. 792.

(3) The plaintiffs do not suggest that they be per-

mitted to amend their second amended complaint, and,

therefore, this case should be dismissed on the merits

(R. 120, 125).

The Circuit Court of Appeals affirmed this judgment and

found as a fact that no damages resulted to petitioners,

that the gasoline was all sold in due course, and that the

increase in price was passed on to their customers. The

Court held that petitioners were seeking ‘‘not compensa-

tion for damages suffered by defendants’ illegal acts, but

profits because of said acts’’, and that as there was no

basis for recovery of compensatory damages, the trial

court correctly entered a summary judgment in favor of

respondents (R. 138-139, 142).

4

Since this is an appeal from an order sustaining defend-

ants’ motion for summary judgment, defendants will as-

sume for the purpose of this appeal that the allegations

in plaintiffs’ complaint and the indictment in the Madison

Oil Case in regard to the conspiracy and the increases in

prices are true.

SUMMARY OF ARGUMENT.

I.

The petition for writ of certiorari should be denied be-

cause the finding of fact of both the trial court and the

Cireuit Court of Appeals that petitioners sustained no

damages is supported by these undisputed facts: petition-

ers admitted at the pre-trial hearing that they were not

claiming any lessening in their margins and that their

claim was based on gasoline which they bought and resold

(R. 112-113); they had the protection of the guaranteed

margin provision of their supply contract (R. 20); and

they based their case upon the M adison Oil Case in which

the conspiracy charged by the Government and found to

exist by the Supreme Court was one which had for its

purpose the raising of the whole price structure of gaso-

line in the Mid-Western area, which would include both

the buying and selling prices of petitioners (R. 37-38).

United States v. Socony-Vacuum Oil Co., Inc., et al., 310

U. 8. 150, 192 (1940). Petitioners did not offer any evi-

dence or affidavits in opposition to the motion for summary

judgment.

II.

The petition for writ of certiorari should be denied be-

cause petitioners’ contention in this case that a person is

entitled to recover under the Clayton Act treble the amount

of any increase in price resulting from a conspiracy, irre-

spective of pecuniary loss, has been decided already by

the Supreme Court adversely to this contention. Peti-

tioners’ claim is based upon the rule of Southern Pacific

Company, et al. v. Darnell-Taenzer Lumber Company, et al.,

6

245 U. S. 531, 534 (1918) and other tariff overcharge cases,

in which the Court has held that a shipper in privity with

the carrier can recover under Section 1 of the Interstate

Commerce Act for the amount of any tariff overcharge

paid by him without proof of pecuniary loss. The Supreme

Court has held that this rule is not applicable to an action

for treble damages under the antitrust laws, and that a

person bringing suit under such laws must show that he

has sustained a pecuniary loss as a result of the increase

in price paid by him. Keogh v. Chicago & Northwestern

Railway Company, et al., 260 U. S. 156, 164-165 (1922).

Likewise, in companion cases to the present one, both the

Seventh and Eighth Cireuit Courts of Appeals have held

that a jobber of gasoline is not entitled to recover the

amount of the increase in a price resulting from the con-

spiracy charged in the Madison Oil Case, but that he must

show that he has sustained a pecuniary loss as a result

of such increase in price. Twin Ports Oil Co. v. Pure Oil

Co., 119 F. (2d) 747 (C. C. A. 8th, 1941), certiorari denied

314 U.S. 644, rehearing denied 314 U.S. 711; Northwestern

Oil Co. v. Socony-Vacuum Oil Co., Inc., et al., 188 F. (2d)

967 (C. C. A. 7th, 1948), certiorari denied 321 U. 8. 792.

These decisions are in accord with the well-settled rule

of treble damage cases under the antitrust laws that a

person is injured in his property only ‘‘when his property

is diminished’’. Chattanooga Foundry and Pipe Works

v. City of Atlanta, 203 U. S. 390, 399 (1906).

TIT.

There is no conflict between the decision in the present

case and that of the Second Cireuit Court of Appeals in

Straus, et al. v. Victor Talking Mach. Co., et al., 297 F.

791 (C. C. A. 2d, 1924), because in that case Straus sus-

tained a pecuniary loss which was measured exactly by

_ <7

7

the increase in the purchase price to him. He was forced

from a wholesale to a retail market, and he sustained a

loss in the amount of this increase in price. In the present

ease petitioners admit that they are not claiming any

lessening in their margins; and they do not deny that here

the conspiracy has raised both their buying and selling

prices and in addition that they had adequate protection

from any loss under the guaranteed margin provision of

their supply contract.

IV.

There is no conflict between the present case and the

freight rate or tariff overcharge cases relied upon by

petitioners. <A tariff overcharge is recoverable under the

Interstate Commerce Act as a matter of law, without proof

of a pecuniary loss, and is recoverable only by persons in

privity with the carrier. An action under the antitrust

laws is not for the recovery of an overcharge or inerease

in price as such, but is ‘‘for threefold the damages by him

sustained.’’ Recovery is not limited to persons in privity

with the wrongdoer, but extends to all persons who have

sustained a pecuniary loss as a proximate result of the

unlawful act. The Supreme Court has held that the freight

rate overcharge cases are not applicable to an action for

treble damages under the antitrust laws. Keogh v. Chi-

cago & Northwestern Railway Company, et al., 260 U.S.

156, 164-165 (1922).

¥.

If the Court considers that compliance with Rule 38 is

jurisdictional, the petition for writ of certiorari should be

denied because petitioners failed to comply with Rule 38

of the Supreme Court Rules in that they did not serve

respondents with a copy of the record within ten days

after the filing in the Supreme Court.

&

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LOPE EY ETE MA IETS

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ARGUMENT.

I.

The Petition for Writ of Certiorari Should Be Denied

Because the Finding of Fact of the Circuit Court of

Appeals That Petitioners Sustained No Damage Is Sup.

ported by the Undisputed Evidence in the Record.

Petitioners offered no affidavits or evidence in opposition

to the motion for summary judgment but by stipulating at

the pre-trial conference that they were not claiming any

lessening in their margins and by basing their case upon

the Madison Oil Case, they have conceded that the increase

in their buying price was passed on to their customers or

that the guaranteed margin provision of their contract

protected them from any loss.

Petitioners agreed at the pre-trial hearing as follows:

‘*Mr. Searls (Attorney for respondents): * * * It

is my understanding, Mr. Michel, that you are not

claiming under this complaint that your margin of

profit was lessened on gasoline bought and resold.

‘*Mr. Michel: ‘That is correct, Mr. Searls, we are

proceeding here upon what has been called in this pro-

ceeding and in the brief the illegal exaciion theory,

that a cause of action existed immediately upon the

conspiracy taking effect and increasing the price which

the plaintiff had to pay for its gasoline over what it

would have had to pay but for the existence and the

carrying out of the conspiracy.

‘*Mr. Searls: Is it correct to say that your claim

of damages is based on gasoline that was bought and

was in fact resold in the ordinary course of business?

**Mr. Michel: Yes.

NERA NERLAEEN E MFR NPL LE TRL STREET ARRIETA TY

9

‘“‘The Court: I take it that it may be further stipu-

lated by the parties that the record which is now being

made at this pre-trial conference may be considered

by the Court as part of the record before him when

he passes upon the motion for summary judgment

which has been made by the defendants in this pro-

ceeding.

‘‘Mr. Searls: That’s true for the defendants, your

Honor.

‘Mr. Michel: And that is true for the plaintiff.’’

(R. 112-113.)

The indictment, which is an exhibit to petitioners’

amended complaint, and other proceedings in the Madison

Oil Case, which are a part of the record in this case, also

establish that the increase in the tank car price (petition-

ers’ buying price) was followed by an increase in the

retail price (petitioners’ selling price).'

Thus, the conspiracy charged by the Government and

found to exist by the Supreme Court in the Madison Oil

Case was one which had for its purpose the raising of the

whole price structure of gasoline in the Mid-Western area

(R. 37-38). As stated by the Supreme Court in United

States v. Socony-Vacuum Oi Co., Inc., et al., 310 U.S. 150

(1940) :

«* * * the spot market was a ‘peg to hang the price

structure on.’*’ (p. 192)

1. The indictment in the Madison Oil Case charged that an increase in

tank car prices will result directly in an increase in retail prices of gaso-

line and that defendants intentionally increased the tank car price of

gasoline and in turn intentionally raised the general level of retail prices

prevailing in the Mid-Western area, including the Western District of

Wisconsin (R. 37, 38). The trial court, in his charge te the jury in that

case, instructed them to return ai verdict of “not guilty” unless they

found that the defendants had intentionally raised the tank car price of

gasoline “and in turn have intentionally raised the general level of retail

prices prevailing in said Mid-Western area, including the Western Dis-

trict of Wisconsin” (R. 101).

See opening statements and closing arguments of Government counsel

in Madison Oi] Case (R. 108, 105-106, 2800, in United States v. Socony-

Vacuum Oi! Co. Inc, et al, Nos, 346 and 347, 310 U. S. 150 (1940)), and

opinion of the Supreme Court in United States v. Socony-Vacuum Oil Co.

Inc, et al. 310 U. S. 150, 190-192, 198-200 (10). A court may take

judicial notice of its records, United States v. Pink, 315 U. S. 208 (1942).

PRATER SET ERT IT SATS ey WN

10

Within this price structure, refiners, brokers, jobbers, sub-

jobbers, and dealers were buying and selling and con-

sumers were buying. The same gallon of gasoline might

pass through the hands of four or five purchasers before

reaching the consumer and each sale would be based on

this increased price structure. Thus, upon any unlawful

rise in the tank car price, both petitioners’ buying and

selling prices were increased. The same was true as to

the buying and selling prices of the service station dealers

purchasing from petitioners. Only the consumer, who is

not a reseller, found himself bearing the increase in price.

Where the consumer has paid the amount of an unlawful

increase, he, and he alone, is the person who has sustained

an injury in business or property within the meaning of

the Clayton Act. He is the one injured, because his prop-

erty has been diminished. Chattanooga Foundry and Pipe

Works v. City of Atlanta, 203 U. S. 390, 399 (1906). Where,

as here, the conspiracy has raised the whole market strue-

ture, the jobber’s or middleman’s property has not been

diminished. This was particularly true in the present case

for the additional reason that petitioners’ contract with

their supplier guaranteed them a margin of 34¢ per gallon

on the gasoline bought and sold by them (R. 20). Both the

trial court and Cireuit Court of Appeals emphasized this

as an additional fact which disclosed that petitioners sus-

tained no pecuniary loss as a result of the price rise.

Petitioners do not deny and offered no affidavits to con-

tradict the fact that there was an increase in the whole

price structure of gasoline in the Mid-Western area, and

that this, together with the guaranteed margin provision

of their contract, prevented any loss or injury in their

business or property. In fact, as suggested by the trial

court, the price rise may have been a benefit to them as

they were buying and selling on a rising market.

Petitioners contend that they are entitled to recover

RADE ERE RANE ARETE PE PN LI I AMT eT

ll

treble the amount of any increase in their buying price

irrespective of any pecuniary loss. Under such contention

petitioners, their service station dealer, and the consumer

would each be entitled to recover three times the amount

of the original increase upon the same gallon of gasoline.

This would create a total liability upon respondents of nine

times the amount of the increase. In other cases where

the ownership of the gasoline may have passed through the

hands of a broker and sub-jobber, the amount of liability

would be fifteen times the amount of the increase. Thus,

the contention of petitioners that they are entitled to re-

cover treble the amount of any increase in price as such,

irrespective of pecuniary damage, is not only contrary to

the express wording of the Clayton Act, which requires an

injury in business or property, but would lead to the most

absurd and inequitable results.

II.

The Petition for Writ of Certiorari Should Be Denied

Because Petitioners’ Contention That a Person Is En-

titled to Recover Under the Clayton Act Treble the

Amount of Any Increase in Price Resulting From a Con-

spiracy, Irrespective of Pecuniary Loss in Business or

Property, Has Been Decided Already by the Supreme

Court Adversely to This Contention.

Section 4 of the Clayton Act (15 U. S. C. A., See. 15),

upon which this action is based, provides:

‘**Any person who shall be injured in his business or

property by reason of anything forbidden in the anti-

trust laws may sue therefor * * * and shall recover

threefold the damages by him sustained, and the cost

of suit, including a reasonable attorney’s fee. * * *”’

Petitioners’ contention in this case is based upon the rule

of Southern Pacific Company, et al. v. Darnell-Taenzer

i a a a

12

Lumber Company, et al., 245 U. S. 531, 534 (1918), and

other tariff overcharge cases, in which the Court has held

that under Section 1 of the Interstate Commerce Act a

person in privity with the carrier can collect the amount of

any tariff overcharge paid by him without proof of pe-

cuniary loss.

Respondents contend that an action under the Clayton

Act, which expressly requires an injury in business or

property, is not for the recovery of an overcharge as such,

but is for the recovery of damages, that such action is not

based on the existence of privity, and that the same rule

requiring pecuniary loss as announced in Pennsylvania

Railroad Company v. International Coal Mining Company,

230 U. S. 184, 202-203, 206 (1913), is applicable here.

The Supreme Court has held that the rule of Southern

Pacific Company, et al. vy. Darnell-Taenzer Lumber Com-

pany, et al., 245 U. S. 531, 534 (1918), which is relied upon

by petitioners, is not applicable to an action for treble

damages under the antitrust laws, and that the rule re-

quiring pecuniary loss, as announced in the International

Coal Case, is controlling. In Keogh v. Chicago & North-

western Railway Company, et al., 260 U.S. 156 (1922), the

Supreme Court, speaking through Mr. Justice Brandeis,

said:

«* * * Under $7 of the Anti-Trust Act, as un-

der $8 of the Act to Regulate Commerce, Pennsyl-

vania R. R. Co. v. International Coal Mining Co., 230

U. S. 184, recovery cannot be had unless it is shown,

that, as a result of defendants’ acts, damages in some

amount susceptible of expression in figures resulted.

These damages must be proved by facts from which

their existence is logically and legally inferable. They

cannot be supplied by conjecture. To make proof of

such facts would be impossible in the case before us.

It is not like those cases where a shipper recovers from

a LEE EFA YL LP, RT ay = PORE » SS

13

the carrier the amount by which its exaction exceeded

the legal rate. Southern Pacific Co. v. Darnell-Taenzer

Co., 245 U.S. 531 * * *’? (pp. 164-165).

The Court held that the plaintiff must allege more than

the mere payment of an increased price, the Court stating:

«* * * Hyxaction of this higher legal rate may

not have injured Keogh at all; for a lower rate might

not have benefited him. * * * Under these cir-

cumstances no court or jury could say that, if the rate

had been lower, Keogh would have enjoyed the dif-

ference between the rates or that any other advantage

would have accrued to him. The benefit might have

gone to his customers, or conceivably, to the ultimate

consumer”’’ (p. 165).

In companion cases to the present one, both the Seventh

and Kighth Cireuit Courts of Appeals have held that a

jobber is not entitled to recover the amount of the in-

crease in a price resulting from the conspiracy charged in

the Madison Oil Case, but that he must show that he has

sustained a pecuniary loss as a result of such increase in

price. Twin Ports Oil Co. v. Pure Oil Co., 119 F. (2d)

747 (C. C. A. 8th, 1941), certiorari denied 314 U. S. 644,

rehearing denied 314 U. S. 711; Northwestern Oil Co. v.

Socony-Vacuum Oil Co., Inc., et al., 1388 F. (2d) 967 (C. C.

A. 7th, 1943), certiorari denied 321 U. S. 792.. Other job-

ber treble damage cases to the same effect are: Leonard

v. Socony-Vacuum Oil Co., Ine., et al., 42 F. Supp. 369,

370 (D. C. W. D. Wis., 1942); H. B. Miller Oil Co. v. So-

cony-Vacuum Oil Co., Inc., et al., 37 F. Supp. 8381 (D. C.

EF. D. Mo., E. D. 1941); Farmers Co-Op. Oil Co. v. Socony-

Vacuum Oil Co., Inc. et al., 133 F. (2d) 101, 103, (C. C. A.

8th, 1942).

These decisions are in accord with the well-settled rule

that actual pecuniary loss is the gist of an action under

Section 4 of the Clayton Act or the substantially similar

Section 7 of the Sherman Act. As stated by Mr. Justice

PR ARNT Re RY IE PE Ee eS

14

Holmes in Chattanooga Foundry and Pipe Works v. City of

Atlanta, 203 U. S. 390 (1906) :

«* * * A man is injured in his property when his

property is diminished * * *’’ (p. 399).

Other treble damage cases to the same effect are: Foster

& Kleiser Co. v. Special Site Sign Co., 85 F. (2d) 742, 750

(C. C. A. 9th, 1936), certiorari denied 299 U. S. 613; Glenn

Coal Co. v. Dickinson Fuel Co., et al., 72 F. (2d) 885, 887

(C. C. A. 4th, 1934); Jack v. Armour & Co., et al., 291 F,

741, 745 (C. C. A. 8th, 1923); Locker, et al, v. American

Tobacco Co., et al., 218 F. 447, 448 (C. C. A. 2d, 1914).

Ii.

There Is No Conflict Between the Decision in the Present

Case and That of the Second Circuit in Straus, et al. v.

Victor Talking Mach. Co., et al., 297 F. 791 (C. C. A. 2d,

1924).

Petitioners urge as a ground for jurisdiction in this

Court that the decision in this case is in conflict with that

of the Second Cireuit Court of Appeals in Straus, et al.

v. Victor Talking Mach. Co., et al., supra.

The plaintiff in the Straus Case was a retailer who had

been accustomed to buying Victor products at wholesale

prices. Because plaintiff refused to abide by certain trade

practices imposed by the Victor Company, that company

refused to permit Straus to continue to buy at wholesale.

His competitors continued to receive the benefit of the

wholesale prices. In order to supply his customers, Straus

was forced to buy Victor products on the retail market.

This case does not conflict with the present one because:

(1) Straus was forced from a wholesale to a re-

tail market. In other words, Straus was forced to

+ buy and sell on the retail market. He thus suffered

an actual pecuniary loss which was measured exactly

by the increase in the price to him,

AMY LINLS EVAL LEE LY GER EINE TI TH SATE AL AG I RET PNET RO

15

(2) Only the price to Straus was raised and he

was the only one injured as a result of the conspiracy.

His selling price was not raised. In the present

ease the whole market structure has been raised as a

result of the conspiracy and the consumer has borne

the increase in price.

(3) In the present case, petitioners do not deny

the fact that there was an increase in the whole market

structure of gasoline and in addition that they were

protected by the guaranteed margin provision of their

contract, and they admit that they are not claiming

any lessening in their margins.

(4) The Straus Case was urged upon the Eighth

Circuit Court of Appeals in Twin Ports Oil Co. v.

Pure Oil Co., 119 F. (2d) 747 (C. C. A. 8th, 1941),

and upon the Seventh Circuit Court of Appeals in

Northwestern Oil Co. v. Socony-Vacuum Oil Co., Inc.,

et al., 138 F. (2d) 967 (C. C. A. 7th, 1943) ; it was urged

upon the Supreme Court in the petition for writ of

certiorari which was filed in each of such cases, and

the petitions were denied (314 U. S. 644; 321 U. S.

792). In view of the many antitrust decisions holding

that pecuniary loss is essential to recovery under the

antitrust laws, statements in the Straus Case must be

considered in the light of the facts of that case which

established that a pecuniary loss had been sustained

in the amount of the increase in price which was the

difference between the wholesale price and the price

paid by Straus.

IV.

There Is No Conflict Between the Decision in the Present

Case and the Freight Rate Overcharge Cases and Other

Cases Relied Upon by Petitioners.

- In support of their contention that they can recover the

amount of the increased price as such, petitioners rely on

certain freight rate or tariff overcharge cases. These cases

are not applicable. The recovery of a tariff overcharge

ERE LOI PE PLES TL MIE LETTE IT RENEE ETE LPR PN AE

16

under the Interstate Commerce Act (49 U. S. C. A. See-

tion 1) differs from a recovery under the Clayton Act, in

the following respects:

(1) A tariff overcharge is recoverable as a mat-

ter of law, without showing a pecuniary loss, Lowis-

ville d& Nashville Railroad Co. v. Sloss-Sheffield Steel

& Iron Company, 269 U. S. 217, 235 (1925); New York,

N. H. & H. R. Co., et al. v. Ballou & Wright, 242

F. 862, 867 (C. C. A. 9th, 1917); Doughty-McDonald

Grocery Company, et al. v. Atchison, Topeka & Santa

Fe Railway Company, et al., 155 I. C. C. 47 (1929).

(2) As the recovery is of the tariff overcharge as

such, only persons in privity with the carrier are en-

titled to recover—thus, suit must be brought by the

one who paid the overcharge and against the carrier

which collected the overcharge. Southern Pacific

Company, et al. v. Darnell-Taenzer Lumber Company,

et al., 245 U.S. 531, 534 (1918) ; Missouri Portland Ce-

ment Company v. Director General, as Agent, 88 I. C.

C. 492, 495, 496 (1924); Nicola, Stone & Myers Com-

pany v. Louisville & Nashville Railroad Company, et

al.. 14 I. C. C. 199, 209 (1908).

(3) An action under the Clayton Act is not for re-

covery of an overcharge as such, but is ‘‘for three-

fold the damages by him sustained.’’ Recovery is not

limited to persons in privity with the wrongdoer but

extends to all persons who have suffered pecuniary

loss as a proximate result of the illegal act. A con-

spirator is liable though he has no dealings with the

injured party. The amount of damages may be more

or less than the amount of any increase in the price.

Thus, the Interstate Commerce Act authorizes the recovery

of a tariff overcharge by the one who pays it in the first

instance; the Clayton Act authorizes the recovery of the

damages sustained.

The distinctive character of the railroad rate overcharge

eases, which do not require proof of pecuniary loss, is em-

phasized by the fact that in suits by persons under the

2 er en eee SEP MASE IO. Reena RET ENE ER! peearsoe eben ietsnnens ————————

" LORIE MOSER CEE: PREAH PSA Mv Re im FAN i eae x R ca i Be e

17

Interstate Commerce Act for a violation of Section 2 (un-

just discrimination provision) or for a violation of Sec-

tion 4 (the long-and-short-haul provision), pecuniary loss

must be established. Pennsylvania Railroad Company v.

International Coal Mining Company, 230 U.S. 184, 202-203,

906 (1913); Davis v. Portland Seed Company, 264 U. 8.

403 (1924).

The Clayton Act is subject to the same rules of proof as

announced in the International Coal Case, and the so-

called rate reparation cases construing Section 1 of the

Interstate Commerce Act are wholly inapplicable. Keogh

vy. Chicago & Northwestern Railway Company, et al., 260

U. S. 156, 164-165 (1922).

Petitioners cite Chattanooga Foundry and Pipe Works v.

City of Atlanta, 203 U.S. 390, 399 (1906) in which the plain-

tiff was injured because its property was diminished. The

City of Atlanta had purchased pipe for its own use in its

own city water system and the pipe was not purchased

for resale. Thus, the city was a consumer and it bore the

illegally increased price. The City of Atlanta, therefore,

actually sustained a pecuniary loss which was measured

by the amount of the illegally increased price of the pipe.

Petitioners further cite Thomsen, et al. v. Cayser, et al.,

243 U. S. 66 (1917), and Story Parchment Company v.

Paterson Parchment Paper Company, et al., 282 U. 8. 555

(1931). In each of these cases the plaintiff had actually

suffered a loss and the courts do not even suggest that the

payment of an increased price, in and of itself, gives rise

to a right to recover the increase without proof of loss.

It is true that the amount of an increase in a price may

equal the amount of pecuniary loss sustained. This would

follow where a person paying the amount of an illegal in-

erease in price has borne the full amount of the increase,

but petitioners do not claim that they have borne all, or

18

any part, of the increase. As stated by the Circuit Court

of Appeals, petitioners are seeking ‘‘not compensation for

damages suffered by defendants’ illegal acts, but profits

because of said acts.’’

V.

If Compliance With Rule 38 Is Jurisdictional, the Petition

for Writ of Certiorari Should Be Denied Because Peti-

tioners Did Not Serve Respondents With a Copy of the

Record Within Ten Days After the Filing in the Supreme

Court.

If the Court considers that compliance with Rule 38 is

jurisdictional, we call the Court’s attention to the follow-

ing: Petitioners served counsel for respondents with a

copy of the petition and supporting brief on July 5, 1945;

they filed the record, petition and brief in the Supreme

Court on July 10, 1945; and counsel for respondents re-

ceived from petitioners a copy of the record on July 26,

1945.

Wuenrerore, respondents pray that the petition for writ

of certiorari be in all things denied.

Respectfully submitted,

DAVID T. SEARLS,

VINSON, ELKINS, WEEMS & FRANCIS,

Esperson Building,

Houston, Texas,

G. AARON YOUNGQUIST,

FOWLER, YOUNGQUIST, FURBER, TANEY & JOHNSON,

Northwestern Bank Building,

Minneapolis, Minnesota,

Attorneys for Respondents, Phillips Petroleum

Company, The Pure Oil Company, Sinclair

Refining Company, Shell Oil Company, Inc.,

Socony-Vacuum Oil Company, Inc., Skelly Oil

Company, Continental Oil Company, and Cities

Service Oil Company.