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PEERLESS PETROCHEMICALS, INC. v. GETTY REF. & MKTG

November 7, 1984

PEERLESS PETROCHEMICALS, INC., Plaintiff,
v.
GETTY REFINING AND MARKETING COMPANY, Defendant



The opinion of the court was delivered by: WEXLER

MEMORANDUM AND ORDER

LEONARD D. WEXLER, UNITED STATES DISTRICT JUDGE

 This is an action for overcharges under Section 210(b) of the Economic Stabilization Act of 1970, 12 U.S.C. Section 1904 note, as incorporated in the Emergency Petroleum Allocation Act, 15 U.S.C. Section 751 et seq. Plaintiff has moved for partial summary judgment, and defendant has cross-moved for summary judgment.

 I. PRELIMINARY STATEMENT OF FACTS

 This case primarily concerns events which took place in 1979. At that time, the Department of Energy maintained a Buy/Sell Program, under which major integrated refiners were required to sell a portion of their crude oil supplies to small buyers at limited prices. See 10 C.F.R. Section 211.65 (1981). Plaintiff was identified by the Department of Energy as an eligible refiner-buyer under she Program and provided an emergency allocation of crude-oil for the months of November and December 1979. Defendant was identified by the Department as a refiner-seller under the Program. Plaintiff and defendant entered into a contract whereby defendant would sell plaintiff a certain quantity of crude oil, at the maximum legal price. Plaintiff then assigned the contract to Derby Distributors, Inc. There existed an arrangement between plaintiff and Derby whereby Derby agreed to facilitate the purchase of oil by plaintiff. Under this arrangement, oil intended for ultimate sale to plaintiff would be payed for initially by Derby, which would take title to the oil. Ultimately, plaintiff would take title to the oil, paying Derby for Derby's expenses, plus interest and a flat fee per barrel. Both defendant and the Department of Energy were aware of this arrangement.

 Derby payed defendant for the oil in question. Derby then billed plaintiff. Plaintiff protested to Derby regarding the amount of Derby's payment to defendant. On August 21, 1981, plaintiff and Derby agreed that plaintiff, prior to commencing suit against defendant, would place the disputed amount in an escrow account, and that any recovery by Derby from defendant resulting from claims asserted by plaintiff would be remitted by Derby to plaintiff. Plaintiff now contends that the amount which defendant charged Derby was in excess of that allowed under the relevant Depatment of Energy regulation, 10 C.F.R. Section 212.94(b)(1981), as amended by Special Rule No. 2, 10 C.F.R. Part 212, Subpart F, Appendix A (1981), 44 Fed. Reg. 9375, Feb. 13, 1979.

 II. STANDING

 The first issue is whether plaintiff has standing to sue defendant.

 Defendant argues that plaintiff is an indirect purchaser of the oil in question, having purchased the oil from Derby rather than from defendant, and that plaintiff therefore lacks standing to sue defendant.

 Defendant relies upon Gulf Oil Corp. v. Dyke, 734 F.2d 797, 807 (T.E.C.A. 1984). In that case, an arrangement existed under which defendant Gulf would sell gasoline to Tesoro Petroleum Corporation, which would in turn sell the gasoline to plaintiff Fletcher at a fixed markup. Regulations were then promulgated requiring Gulf to supply gasoline at limited prices to "all wholesale purchaser-resellers . . . which purchased or obtained" gasoline from Gulf during a certain base period. See 10 C.F.R. Section 211.9(a)(1981). The arrangement continued. The Court held that since plaintiff Fletcher purchased gasoline from Tesoro rather than from defendant Gulf, Fletcher was an "indirect purchaser" and so lacked standing to sue Gulf for overcharges. The Court rejected the view that the transactions in question in substance constituted the sale of oil by Gulf to Fletcher.

 There is an important distinction between Gulf Oil, supra, and the instant case. In Gulf Oil, under the facts of the case it was arguable that Tesoro rather than Fletcher had "purchased or obtained" gasoline from Gulf within the meaning of 10 C.F.R. Section 211.9(a)(1981) during the relevant base period, and that Gulf's obligation to sell gasoline at limited prices therefore ran to Tesoro rather than to Fletcher. Consequently, the Court's decision to treat Fletcher as an "indirect purchaser" lacking standing to sue left the door open for a suit by Tesoro, which was arguably the party which the regulations sought to protect. In the instant case, by contrast, defendant's obligation to sell oil at limited prices under 10 C.F.R. Section 211.65 (1981) clearly ran to plaintiff, the party which was designated by the Department of Energy as an eligible refiner-buyer and which entered into a contract with defendant. Consequently, if we treat plaintiff as an "indirect purchaser" lacking standing to sue, we will deny recovery to the party which the regulations seek to protect. Further, Derby will also lack standing to sue, since Derby is not an eligible refiner-buyer and so has no rights against defendant under 10 C.F.R. Section 211.65 (1981), so that defendant will suffer no legal consequences for any overcharges it may have committed. These results would be especially improper in light of the fact that both defendant and the Department of Energy were aware of plaintiff's assignment of the contract to Derby and neither at any time suggested that the assignment would alter the essential nature of the contemplated transaction as the sale of oil by defendant to plaintiff pursuant to 10 C.F.R. Section 211.65 (1981). We therefore hold that the instant sale of oil by defendant to Derby constituted the sale of oil by defendant to plaintiff for the purposes of 10 C.F.R. Section 211.65 (1981), and that plaintiff therefore has standing to sue defendant for overcharges.

 Defendant contends that plaintiff, by assigning the contract to Derby, thereby assigned to Derby plaintiff's potential right to sue for any overcharges. We reject this contention, as we see nothing in the regulations to suggest that a refiner-buyer can assign its right to sue for overcharges to a third party prior to the occurrence of such overcharges. Even if we were to accept this contention, however, we would find that Derby reassigned the right to sue for overcharges back to plaintiff by means of the settlement agreement between plaintiff and Derby. Admittedly, the settlement agreement by its terms provided simply that if claims asserted by plaintiff against defendant resulted in a recovery by Derby, Derby would remit such recovery to plaintiff. However, we believe that the intent of the parties to the settlement agreement was that Derby would transfer to plaintiff all rights of Derby against defendant resulting from the transaction in question.

 For the above reasons, we find that plaintiff has standing to ...


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