The opinion of the court was delivered by: CONNER
Defendants Mobil Oil Corporation ("Mobil"), Unlimited Petroleum, Inc. ("Unlimited"), and Frank Rooney, Jr. ("Rooney") have moved for summary judgment on the claims alleged in plaintiffs' Third Amended Complaint in this 1977 antitrust case. Defendant Mobil has further moved for summary judgment on its counterclaims.
The facts of this case have been recited at length in two previous opinions by the Court, and will be related here only as necessary to clarify dispositions of the various motions. To identify the parties, plaintiff Petroleum for Contractors, Inc. ("PFC") was, until May 1977, a distributor of petroleum products (gasoline, diesel fuel and lubricants) to construction contractors in the New York City metropolitan area. During the same time period, plaintiff Liquid Transportation, Inc. ("LTC") leased tank trucks and other equipment to PFC for use in its distribution business. Plaintiffs William J. Keahon and Charles Pretsch were, until May 1977, shareholders, directors, officers and employees of PFC and LTC, and owners of the land, buildings and plant facilities leased to PFC for use in its business. Defendant Mobil is, and was during all relevant time periods, in the business, inter alia, of selling gasoline, diesel fuel and lubricants. Defendant Unlimited was engaged in the distribution of petroleum products to construction contractors in the New York metropolitan area from late November or early December 1975 through May 1977. Defendant Rooney was an employee of PFC from 1967 to late 1975, when he became an officer of Unlimited.
A. Conspiracy to Eliminate PFC as a Mobil Distributor
Defendants' motion for summary judgment with respect to plaintiffs' claim under Section 1 of the Sherman Act, 15 U.S.C. § 1, that Mobil, Unlimited and Rooney conspired to eliminate PFC as a Mobil distributor, is denied.
The essence of PFC's Section 1 claim is that Mobil, intending to achieve a monopoly position as supplier of lubrication products to the New York area construction contractor market, conspired with defendant Rooney to create defendant Unlimited as an exclusively Mobil distributor of gasoline, diesel fuel and lubricants, in a market previously dominated by PFC, a distributor which sold both Mobil and Chevron lubricants, and, at least before 1974, a certain number of additional brands of such products; to lure away construction contractor customers from PFC to Unlimited; and ultimately, to eliminate PFC as a distributor and competitor of Unlimited, thereby eliminating Chevron and any other potential lubrication product suppliers as competitors of Mobil in the market involved.
PFC charges that the objectives of the conspiracy have been furthered in a number of ways: threats by Mobil to PFC to cut off PFC's supplies of gasoline and diesel fuel if PFC did not confine its lubrication product distribution to Mobil product; representations by Mobil to PFC's customers that Mobil would cut off PFC's gasoline and diesel supplies and cease to provide Mobil's Engine Maintenance Through Progressive Analysis ("EM/PA") service to PFC customers; Mobil's assistance in establishing Unlimited through solicitation of false FEO-17 fuel requirements forms from prospective Unlimited customers, and Unlimited's filing of such false forms with the Federal Energy Administration, see Zielenski Affidavit; the shift of PFC's customers to Unlimited; the resulting elimination of intrabrand competition at the distributor level in the lubrication product market (since, plaintiff asserts, PFC's demise left Unlimited as exclusive Mobil dealer in that market); and the asserted elimination of any significant interbrand competition since, plaintiff asserts, PFC's demise removed the only significant distributor outlet for non-Mobil lubrication products, and caused Chevron, the major Mobil competitor at the supplier level, to drop out of the market, see Lanotte Affidavit.
Viewing the record on this summary judgment motion in the light most favorable to plaintiffs, the parties opposing summary judgment, as the Court is required to do, see Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S. Ct. 486, 491, 7 L. Ed. 2d 458 (1962), it appears at least possible to infer that an agreement violative of Section 1 existed among the several defendants. A grant of summary judgment on this issue is therefore not appropriate. Poller, supra.
PFC and its fellow plaintiffs have raised two claims under Section 2 of the Sherman Act, 15 U.S.C. § 2: that Mobil attempted individually, or conspired with defendants Rooney and Unlimited, to monopolize the area market for lubrication products; and that Mobil succeeded, following PFC's demise, in achieving a monopoly position in that market through its exclusive dealer arrangements with the remaining distributor, Unlimited.
In its previous opinion and order of June 29, 1978, this Court granted defendants' motion to dismiss plaintiffs' Section 2 claims for failing to specify Mobil's market share or otherwise indicate, in their monopoly claim, how Mobil possessed the ability to control prices or exclude competition, or, in their attempted monopolization claim, how Mobil was dangerously close to achieving such ability. In its Third Amended Complaint, plaintiffs rest their Section 2 claims, in part, on allegations that, in early 1974, Mobil possessed a 15% share of the New York area construction contractor lubrication product market through its sales to PFC (which, plaintiffs assert, controlled "virtually 100%" of the distributor market). Plaintiffs then allege that, by the end of 1974, Mobil's market share, measured by PFC's purchases of Mobil lubricants for resale, had increased to 95% as a result of Mobil's exclusive dealing demands in 1974, and Mobil's raising, in 1974, the minimum amount of lubrication product PFC was required to purchase under its general petroleum product contract with Mobil. Plaintiffs further allege that due to continued anticompetitive acts by Mobil, including Mobil's offer, in 1975, to purchase all of PFC's stock of Chevron lubricants, Mobil's market share through sales to PFC remained at 95% thereafter, while Chevron's market share dropped to and remained at 5%.
It now appears, following discovery, that the sales figures plaintiffs rely on are inaccurate, see discussion at part C, infra, and that, contrary to plaintiffs' assertions, PFC's contracts with Mobil were not modified at any time after 1973. However, it further appears that the remaining allegations in plaintiffs' Section 2 claim, when read in conjunction with facts alleged in plaintiffs' Section 1 distributor elimination claim, see part A, supra, might be read to state a conspiracy claim under Section 2, see FLM Collision Parts v. Ford Motor Co., 543 F.2d 1019, 1030 (2d Cir. 1976), cert. denied, 429 U.S. 1097, 97 S. Ct. 1116, 51 L. Ed. 2d 545 (1977); and might also be read to state an attempted monopoly or monopoly claim if also read in conjunction with certain other facts asserted generally in plaintiffs' complaint and specifically in plaintiffs' brief respecting Mobil's ability or near-ability to control the lubrication product market through its statutorily acquired control of the gasoline and diesel fuel market under the Emergency Petroleum Allocation Act of 1973 ("EPAA"), 15 U.S.C. § 751 et seq., see Berkey Photo v. Eastman Kodak Company, 603 F.2d 263, 284 (2d Cir. 1979), cert. denied, 444 U.S. 1093, 100 S. Ct. 1061, 62 L. Ed. 2d 783 (1980); FLM Collision Parts, supra, 543 F.2d at 1030. Finally, it does not appear that permitting plaintiffs to amend the Section 2 claims in their complaint to delete the now apparently inaccurate sales figures, and more explicitly assert a control-through-related-monopoly argument, would unduly prejudice defendants, since the underlying factual assertions necessary to such an amendment have been known to defendants since the conclusion of discovery. For the foregoing reasons, defendants' motion for summary judgment on plaintiffs' Section 2 claims is denied; plaintiffs may amend this count in their complaint to conform with their brief, as indicated.
C. Exclusive Dealing and Tying
Plaintiffs' Third Amended Complaint contains three counts alleging violations of Section 3 of the Clayton Act, 15 U.S.C. § 14. These counts are based on the following factual allegations: that Mobil inserted minimum purchase requirements for lubrication products in PFC's periodically-renewed contracts with Mobil for purchase of gasoline and diesel fuel; that Mobil unilaterally increased such contractual minimum purchase requirements in the period from 1974 to 1977; that Mobil threatened, from 1974 to 1977, to cut off or reduce PFC's gasoline and diesel fuel allocation if PFC did not deal exclusively in Mobil lubrication products; and that, as a result of these Mobil activities, PFC "had no choice . . . other than to reluctantly" accede to Mobil's demands to exclude other lubrication product suppliers, so that PFC's sales of Mobil lubricants rose from 15% in early 1974 to 95% of PFC's lubricant sales by the end of 1974. The complaint further alleges that once PFC had taken such action, Chevron, PFC's other major supplier, was eliminated from this market (since PFC, or later, PFC and Unlimited, controlled virtually all of the resale market).
Plaintiffs then assert two claims based on these alleged facts. In Count 3, plaintiffs state that these Mobil activities constituted, during the period from 1974 to 1977, an illegal tying arrangement under Section 3, conditioning the sale of Mobil gas and diesel fuel on PFC's purchase of Mobil lubricants, which PFC bought reluctantly "so as to assure the continued availability of gas and diesel fuel." In Counts 4 and 5, plaintiffs allege that these activities also constituted, from 1974 to 1977, demands for an illegal exclusive dealing arrangement or requirements contract, which, when acceded to by PFC, "restricted plaintiff PFC from continuing to deal with and purchase from Chevron . . . and also excluded Chevron . . . from dealing with plaintiff PFC."
The record on summary judgment, however, does not support plaintiffs' allegations as to 1974-1977 sales figures or contractual modifications. Mobil states in its Local Rule 9(g) statement, and PFC does not deny in its Rule 9(g) statement, that PFC entered into no new contracts with Mobil after 1973 and did not modify prior contracts with Mobil after 1973. It thus appears that this type of alleged coercion did not occur from 1974 to 1977. Mobil further states in its affidavits and Rule 9(g) statement, which ...