The opinion of the court was delivered by: WYATT
This is a motion by all defendants to dismiss the first and second claims of the complaint in the first action (74 Civ. 2233) and the first claim of the complaint in the second action (74 Civ. 2645). Fed. R. Civ. P. 12(b)(6).
These are two separate civil actions, separately commenced. Plaintiff in the first action is Long Island Lighting Company (Lilco). Plaintiff in the second action is Consolidated Edison Company of New York (Con Ed). The five defendants in each action are the same. They are three major oil companies -- Standard Oil Company of California (SOCal), Texaco, Inc. (Texaco), and Mobil Oil Corporation (Mobil) -- and a subsidiary of SOCal and a subsidiary of Texaco. For simplicity, the two subsidiaries will be disregarded and included in any mention of SOCal and Texaco.
These two actions were consolidated by order filed August 23, 1974. In the federal courts, consolidation does not destroy the separate character of the actions. There may be consolidated discovery procedures and there may be a joint trial of the two actions but each action preserves its separate identity. Johnson v. Manhattan Ry. Co., 289 U.S. 479, 496-97, 77 L. Ed. 1331, 53 S. Ct. 721 (1933); Zdanok v. Glidden Co., 327 F.2d 944, 950 n. 6 (2d Cir. 1964); McAlister v. Guterma, 263 F.2d 65, 68-69 (2d Cir. 1958); Greenberg v. Giannini, 140 F.2d 550 (2d Cir. 1944) (L. Hand, C.J.); Abrams v. Occidental Petroleum Corp., 44 F.R.D. 543, 547 (S.D.N.Y. 1968).
On the return day of this motion, there were also two other motions, one by SOCal and the other by Mobil. These two other motions were adjourned without date, to permit the present motion to be heard and decided first, before considering the other two motions.
The present motion is directed to the complaint in each of the two actions. The questions raised, however, are the same since the complaints in respect of the claims involved are substantially the same. For simplicity, this opinion will consider only the first claim of the complaint in the Lilco action. The decision as to this claim will necessarily govern as to the second claim of the complaint in the Lilco action and as to the first claim of the complaint in the Con Ed action.
The memorandum for movants refers to a few matters outside the complaint, these apparently not the subject of dispute. Lilco, in opposing the three motions, has submitted extensive affidavits. This procedure was probably followed by counsel for Lilco because one set of papers has been submitted by them, opposing all three motions and on one at least of the other motions an affidavit was submitted by the movant. In any event, the decision of the present motion is based solely on the complaint. Affidavits have been excluded and not considered. Fed. R. Civ. P. 12(b)
The First Claim of the Complaint in the Lilco Action (numbers in parentheses refer to paragraph numbers of the complaint)
The claim arises under Section 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2) and under Sections 4 and 16 of the Clayton Act (15 U.S.C. §§ 15, 26). Jurisdiction is laid under 28 U.S.C. § 1337 and appears to exist.
Lilco is an electric utility serving customers on Long Island (3). It needs each year about 7 1/2 million barrels of low sulphur oil, out of an annual requirement of about 21 million barrels of oil of all types. (24)
For some years, New England Petroleum Corporation (Nepco) has been the sole supplier of oil to Lilco (25). Nepco is one of the largest "independent" importers, refiners, and distributors of oil. (14)
SOCal and Texaco in the early 1960's found in Libya (a sovereign state) a "substantial quantity" of low sulphur crude oil. They produced this crude oil in Libya through a jointly owned corporation (Amoseas). SOCal made a long term agreement with Nepco under which SOCal agreed to supply Nepco with substantially all of the share of SOCal of the output of Amoseas in Libya. This crude oil was to be delivered by SOCal to a refinery in the Bahamas (Borco). Borco was owned 65% by Nepco and 35% by SOCal. The effect of the Nepco-SOCal agreement was to make Libya the major source of low sulphur oil for the East Coast of the United States. (10, 12, 27)
There is an agreement between Nepco and Lilco under which Nepco is obligated until March 31, 1980, to supply Lilco with all its requirements of low sulphur oil. The price to Lilco is determined by reference to a published cargo price per barrel, but the agreement "established certain maximum prices". (25, 26)
The general conclusory averment, meaningless except as supported by fact averments, is that defendants and others have conspired to and have monopolized trade in low sulphur oil to be imported into the East Coast of the United States. "A major objective of the conspiracy was and is to protect the monopoly interests of the defendants and others in the Persian Gulf area." No other objective of the conspiracy is averred. Specifically, there is no claim that injury to Lilco was an objective of the conspiracy. Indeed, there was no competition between Lilco and defendants nor did Lilco ...