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WALDRON v. BP

March 18, 1957

Gerald B. WALDRON, individually and doing business as Consolidated Brokerage, Plaintiff,
v.
BRITISH PETROLEUM CO., Ltd., Cities Service Co., Gulf Oil Corp., Socony Mobil Oil Co., Inc., Standard Oil Co. of California, Standard Oil Co. (New Jersey), The Texas Co., Defendants



The opinion of the court was delivered by: DAWSON

These motions seek (1) an order dismissing this private anti-trust action on the ground of improper venue, and (2) an order vacating the purported service of process.

The issue is primarily whether the defendant, an integrated oil company, which does little, if any, business directly in this District, is subject to jurisdiction in this District in an anti-trust action, under the provisions of 12 of the Clayton Act, 15 U.S.C.A. § 22, by reason of certain activities in this District of its wholly owned subsidiaries.

The movant, Standard Oil Company of California (hereinafter referred to as 'Socal') is one of seven defendant oil companies against whom this treble damage, private anti-trust action has been brought by Gerald B. Waldron, doing business as Consolidated Brokerage. The other defendants are British Petroleum Co., Ltd., Cities Service Co., Gulf Oil Corp., Socony Mobil Oil Co., Inc., Standard Oil Co. (New Jersey), and The Texas Co. The complaint alleges that the defendants' actions in regard to the production and distribution of Middle East oil have violated §§ 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2, as well as § 73 of the Wilson Tariff Act, 15 U.S.C.A. § 8.

 The principal issue now before the Court is one of venue. Section 12 of the Clayton Act, reading as follows, states the districts in which an action under the anti-trust laws can be brought against a corporate defendant:

 'Any suit, action, or proceeding under the anti-trust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business * * *'.

 In support of its motion, Socal contends that it (1) is not an inhabitant of this District, being incorporated in Delaware, (2) was not and could not be found here, and (3) does not transact business here.

 Socal is a large integrated company in the petroleum industry. In certain of the Western States it operates directly, but it is also a holding company, owning numerous subsidiaries which produce and market petroleum products in various areas of this country and in foreign countries. The company, in a map which is included in its 1955 Annual Report, referred to the area which encompasses the Southern District of New York as one of its 'principal marketing areas.' The Annual Report also points out that during the year 1955 the company and its subsidiaries had engaged in exploratory and drilling activities in thirty-three States and Alaska, in six Canadian provinces and territories, and in fifteen countries of Latin America. In its exploration, drilling and marketing activities the company operated to a substantial extent through wholly owned subsidiaries.

 Socal has two wholly owned subsidiaries admittedly doing business in the Southern District of New York. They are the California Commercial Company, Inc. and the California Oil Company.

 The California Commercial Company, Inc. (hereinafter referred to as 'Commercial') is a New York corporation having its principal place of business within the Southern District of New York at 30 Rockefeller Plaza. Commercial is described in the 1955 Annual Report of Socal as a 'Service Company' operating principally in New York and Washington, D.C. All of its capital has been provided by Socal which has continuously owned all of its stock. Commercial occupies substantially the same business suite, retains the same telephone number, and uses the same office equipment as that occupied and used by Socal prior to the organization of Commercial in January 1940. However, Commercial maintains its own books of account, has its own employees and its own bank accounts. It attempts to preserve, from a corporate standpoint, an identity of its own separate and apart from the parent company. Nevertheless, its inter-connection with Socal is active insofar as business operations are concerned.

 The door at Commercial's main office in New York City currently bears this legend:

 California Commercial Company, Inc.

 A Subsidiary of Standard Oil Company of California

 And on the tenants' directory in the main concourse of the building appears: 'Standard Oil Company of California. See California Commercial Company Room 4507'. Futhermore, in addition to listings under its own name in the New York City telephone directory, Commercial has also maintained this listing: 'Standard Oil Co. of California. Call California Coml. Co. Inc. -- CIrcl 6-4043'. Socal's President and Chairman of the Board are directors of Commercial.

 Although the certificate of incorporation of Commercial includes the power to engage in a wide variety of business activities, including the manufacture, mining, pumping, drilling, refining and distribution of petroleum, Commercial has in fact done none of these. Instead it receives almost $ 400,000, its entire revenue exclusive of income from securities, for services rendered to Socal and its subsidiaries. By contract, Commercial is compensated for its facilities and services at the rate of cost plus 25%. In each of the last five years, Socal's payments under this contract have aggregated over 95% of the revenue ...


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