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JENNINGS OIL CO. v. MOBIL OIL CORP.

May 21, 1982

JENNINGS OIL COMPANY, INC., et al., Plaintiff,
v.
MOBIL OIL CORPORATION, Defendant



The opinion of the court was delivered by: WERKER

Defendant Mobil Oil Corporation ("Mobil") moves for summary judgment pursuant to Fed.R.Civ.P. 56 as to Counts II and III of the amended complaint. Mobil also seeks decertification of the class on Count III. Plaintiffs have cross-moved for summary judgment on Count III of the amended complaint.

The background of this case is set forth in the Court's opinion conditionally certifying the action as a class action, see Jennings Oil Co. v. Mobil Oil Corp., 80 F.R.D. 124 (S.D.N.Y.1978), and in the opinion denying Mobil's motion for judgment on the pleadings as to Count II of the amended complaint and granting in part and denying in part Mobil's motion to dismiss Count III of the amended complaint. See Jennings Oil Co. v. Mobil Oil Corp., No. 77 Civ. 1398 (S.D.N.Y. Aug. 23, 1979). Reader familiarity with those opinions is assumed.

COUNT II

 Count II of the amended complaint charges Mobil with violating section two of the Sherman Act, 15 U.S.C. § 2, by monopolizing and attempting to monopolize the sale and distribution of Mobil products to Mobil branded retail service stations. Plaintiffs allege that Mobil's actions in March, 1973, of allocating gasoline to its distributors and raising distributor prices without taking the same action with respect to service stations supplied directly by Mobil, "squeezed" Mobil branded distributors and curtailed their ability to compete with Mobil in sales to retail service stations. Plaintiffs argue that by these actions Mobil monopolized the production and distribution of Mobil gasoline, in violation of section 2 of the Sherman Act. According to plaintiffs, Mobil gasoline constitutes a relevant market for Section 2 purposes.

 Mobil contends that three critical factual elements of a claim under § 2 are absent in this case. They are:

 
(a) the existence of competition between Mobil and its gasoline distributors in the sale of Mobil branded gasoline to Mobil service stations;
 
(b) the existence of injury to plaintiffs within the meaning of Section 4 of the Clayton Act; and
 
(c) the existence of a relevant market confined to the distribution of Mobil gasoline.

 COMPETITION BETWEEN PLAINTIFFS AND MOBIL

 Mobil contends that there is no competition between it and plaintiffs and therefore, one of the essential elements of a section 2 violation is absent. Viewed in the light most favorable to plaintiffs, however, the evidence adduced thus far is sufficient to raise genuine issues of material fact as to whether plaintiffs compete with Mobil in the sale of Mobil gasoline to retail service stations.

 Although it appears that plaintiffs and Mobil do not supply the same retailers as a result of the geographic allocation of markets by Mobil, there is evidence that retailers supplied by the branded distributors compete with retailers supplied directly by Mobil. The competition appears to occur primarily between distributor-supplied suburban retailers and Mobil-supplied urban retailers who must compete for sales to customers travelling between the two areas. There is further evidence that the retailers supplied by Mobil were able to sell gasoline at prices lower than those charged by the retailers supplied by branded distributors. This situation allegedly existed because prices charged to retailers by Mobil were lower than those charged to retailers supplied by the distributors as a result of Mobil's increase in the distributor tank-wagon price. Consequently, it would appear that the branded distributors, in order to enable their retailers to effectively compete with retailers supplied by Mobil were engaged or may have been required to engage in price competition with Mobil in the supply of gasoline to retailers of Mobil branded gasoline.

 RELEVANT MARKET

 To prevail on a monopolization claim, a plaintiff must establish the possession of monopoly power and the willful acquisition or maintenance of that power. United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S. Ct. 1698, 1703-04, 16 L. Ed. 2d 778 (1966). To prevail on an attempted monopolization claim, a plaintiff must prove specific intent to monopolize and the dangerous probability of success in monopolizing a given product market. American Tobacco Co. v. United States, 328 U.S. 781, 785, 66 S. Ct. 1125, 1127, 90 L. Ed. 1575 (1946); Nifty Foods Corp. v. Great Atlantic & Pacific Tea Co., 614 F.2d 832, 841 (1980). "Proof of relevant product market is a necessary element of a cause of action for monopolization or attempted monopolization." Id. at 840.

 Plaintiffs contend that the relevant market in this case is Mobil gasoline and accessories. They argue that the provisions of Mobil's Wholesale Distributor Agreement demonstrate that distributors were substantially restricted contractually to selling gasoline purchased from Mobil to outlets carrying the Mobil brand, that petroleum allocation regulations codified at 10 C.F.R. § 211.9(a)(2)(1) curtailed plaintiffs' access to alternative sources of petroleum products, that even prior to the implementation of these regulations, "most major oil companies had adopted policies refusing to take on new distributor business on or about March, 1973," that one of the plaintiffs was unable to obtain an alternative source of supply, that Mobil refused to release one of the plaintiffs who did find another supplier, and that Mobil conceded that its distributors were locked-in to their present suppliers by the allocation regulations.

 Mobil argues that the relevant product market may not be limited to Mobil gasoline and accessories because (a) there is no competition between Mobil and its distributors; (b) plaintiffs had access to alternative sources of supply; and (c) Mobil distributors compete with distributors of other companies. To support its contentions, Mobil has cited to portions of the depositions of the named plaintiffs in which they admit that during periods of shortage or when the price was cheaper they purchased gasoline from suppliers other than Mobil, that branded retailers of Mobil gasoline were at times supplied with gasoline other than Mobil gasoline, that they did not compete with Mobil for the same customers, and that the primary area of competition in the wholesale distribution of Mobil gasoline derived from competition with distributors of other brands of gasoline.

 Summary judgment for the defendants is proper only if "giving full weight to plaintiff's evidence, drawing every reasonable inference in its favor and subjecting defendant's evidence to a critical eye" it may be concluded that a jury "could not rationally have found that plaintiff was entitled to any relief." Nifty Foods Corp. v. Great Atlantic & Pacific Tea Co., 614 F.2d at 839. Where the defendant has presented evidence contradicting plaintiffs' allegations, plaintiffs cannot rest on their pleadings, and must present some significant probative evidence in support of its claims. Id.

 As previously discussed, plaintiffs have introduced sufficient evidence to render the issue of whether they compete with Mobil a ...


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