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- Subject: TEXACO INC. v. HASBROUCK, Syllabus
-
-
-
- (Slip Opinion)
- NOTE: Where it is feasible, a syllabus (headnote) will be released, as
- is being done in connection with this case, at the time the opinion is
- issued. The syllabus constitutes no part of the opinion of the Court
- but has been prepared by the Reporter of Decisions for the convenience
- of the reader. See United States v. Detroit Lumber Co., 200 U. S. 321,
- 337.
- SUPREME COURT OF THE UNITED STATES
-
-
- Syllabus
-
-
-
- TEXACO INC. v. HASBROUCK, dba RICK'S TEXACO, et al.
-
- certiorari to the united states court of appeals for the ninth circuit
-
- No. 87-2048. Argued December 5, 1989, Decided June 14, 1990
-
- Between 1972 and 1981, petitioner Texaco sold gasoline at its retail tank
- wagon prices to respondent independent Texaco retailers but granted
- substantial discounts to distributors Gull and Dompier. Gull resold the
- gas under its own name; the fact that it was being supplied by Texaco was
- unknown to respondents. Dompier paid a higher price than Gull, and
- supplied its gas under the Texaco brand name to retail stations. With the
- encouragement of Texaco, Dompier entered the retail market directly. Both
- distributors picked up gas at the Texaco plant and delivered it directly to
- their retail outlets, and neither maintained any significant storage
- facilities. Unlike Gull, Dompier received an additional discount from
- Texaco for the deliveries. Texaco executives were well aware of Dompier's
- dramatic growth and attributed it to the magnitude of the discounts.
- During the relevant period, the stations supplied by the distributors
- increased their sales volume dramatically, while respondents' sales
- suffered a corresponding decline. In 1976, respondents filed suit against
- Texaco under the Robinson-Patman Amendments to the Clayton Act (Act),
- alleging that the distributor discounts violated 2(a) of the Act, which,
- among other things, forbids any person to "discriminate in price" between
- different purchasers of commodities, where the effect of such
- discrimination is substantially to "injure . . . competition with any
- person who either grants or knowingly receives the benefit of such
- discrimination, or with customers of either of them." The jury awarded
- respondents actual damages. The District Court denied Texaco's motion for
- judgment notwithstanding the verdict. Texaco had claimed that, as a matter
- of law, its "functional discounts", i. e., discounts that are given to a
- purchaser based on its role in the supplier's distributive system and
- reflect, at least in a generalized sense, the services performed by the
- purchaser for the supplier, did not adversely affect competition within the
- meaning of the Act. The District Court rejected Texaco's argument,
- reasoning that the "presumed legality of functional discounts" had been
- rebutted by evidence that the amount of Gull's and Dompier's discounts was
- not reasonably related to the cost of any function they performed. The
- Court of Appeals affirmed.
-
- Held:
- 1. Respondents have satisfied their burden of proving that Texaco
- violated the Act. Pp. 9-26.
-
- (a) Texaco's argument that it did not "discriminate in price"
- within the meaning of 2(a) by charging different prices is rejected
- in light of this Court's holding in FTC v. Anheuser-Busch, Inc.,
- 363 U. S. 536, 549, that "a price discrimination within the meaning
- of [2(a)] is merely a price difference." Texaco's argument, which
- would create a blanket exemption for all functional discounts, has
- some support in the legislative history of the Act, but is
- foreclosed by the text of the Act itself, which plainly reveals a
- concern with competitive consequences at different levels of
- distribution and carefully defines two specific affirmative
- defenses that are unavailable. Pp. 11-13.
-
- (b) Also rejected is Texaco's argument that, at least to the extent
- that Gull and Dompier acted as wholesalers, the price differentials
- did not "injure . . . competition" within the meaning of the Act.
- It is true that a legitimate functional discount that constitutes a
- reasonable reimbursement for the purchasers' actual marketing
- functions does not violate the Act. Thus, such a discount raises
- no inference of injury to competition under FTC v. Morton Salt Co.,
- 334 U. S. 37, 46-47. However, the Act does not tolerate a
- functional discount that is completely untethered either to the
- supplier's savings or the wholesaler's costs. This conclusion is
- consistent with Federal Trade Commission (FTC) practice, with
- Perkins v. Standard Oil Co. of California, 395 U. S. 642, and with
- the analysis of antitrust commentators. The record here adequately
- supports the finding that Texaco violated the Act. There was an
- extraordinary absence of evidence to connect Gull's and Dompier's
- discounts to any savings enjoyed by Texaco. Both Gull and Dompier
- received the full discount on all purchases even though most of
- their volume was resold directly to consumers, and the extra margin
- on those sales obviously enabled them to price aggressively in both
- their retail and wholesale marketing. The Morton Salt presumption
- of adverse effect becomes all the more appropriate to the extent
- they competed with respondents in the retail market. Furthermore,
- the evidence indicates that Texaco was encouraging Dompier to
- integrate downward and was fully informed about the dramatic impact
- of the Dompier discount on the retail market at the same time that
- Texaco was inhibiting upward integration by respondents. Pp.
- 13-26.
-
- 2. There is no merit to Texaco's contention that the damages award must
- be judged excessive as a matter of law. Texaco's theory improperly
- blurs the distinction between the liability and damages issues. There
- is no doubt that respondents' proof of a continuing violation as to the
- discounts to both distributors throughout the 9-year damages period was
- sufficient. Proof of the specific amount of their damages necessarily
- was less precise, but the expert testimony provided a sufficient basis
- for an acceptable estimate of the amount of damages. Cf., e. g., J.
- Truett Payne Co. v. Chrysler Motors Corp., 451 U. S. 557, 565-566. Pp.
- 26-28.
-
- 842 F. 2d 1034, affirmed.
-
- Stevens, J., delivered the opinion of the Court, in which Rehnquist, C. J.,
- and Brennan, Marshall, Blackmun, and O'Connor, JJ., joined. White, J.,
- filed an opinion concurring in the result. Scalia, J., filed an opinion
- concurring in the judgment, in which Kennedy, J., joined.
-
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