Earl Warren: Number 624, Clyde A. Perkins, petitioner versus Standard Oil Company of California. Mr. Kintner.
Earl W. Kintner: Mr. Chief Justice, may it please the Court. Permit me to premise my remarks by stating that I will focus primarily upon the principle Clayton Act questions presented in this appeal. And Mr. Kucik, my colleague will examine both the questions of causation and damages. This case has come to the Court on a petition for writ of certiorari from the United States Court of Appeals for the Ninth Circuit filed on October 9, 1968 and granted by this Court on January 13, 1969. The petitioner, Clyde A. Perkins filed this suit against the respondent, Standard Oil Company of California in March of 1959, 10 years ago alleging violations of Sections 2 (d), 2 (a), (d) and (e) of the Clayton Act as amended by the Robinson-Patman Act of 1936. In December of 1963, the jury awarded the petitioner actual damages of $336,407.57 which was trebled and attorney's fees of $289,000.00. The case was -- the cause was argued before the Court of Appeals for the Ninth Circuit in June of 1965 and then in November of 1967 early two and a half years later after oral argument and four years after the jury have reached its verdict, the Ninth Circuit set aside the jury verdict and ordered a new trial approximately eight months later in July 16, 1968 Court of Appeals denied the appellee's petition for rehearing. Now, before proceeding to a discussion of the Ninth Circuit's Clayton Act holding, I would like briefly to identify the persons involved and state the facts which I think are essential to an understanding of this portion of the Ninth Circuit's decision. Petitioner Perkins was one of the largest independent distributors in the Pacific Northwest states of Oregon and Washington. He began business in 1928 with a single filling station and over the years built a wholesale and retail gasoline of business and during the claim period March 2 to December 2, 19 -- March 2, 1955 to December 2, 1957. He lease to operated approximately 60 retail stations. Perkins was a wholesaler operating trucking equipment and bulk storage plants. He purchased substantially all his requirements from Standard Oil of California. There is some indication that he purchased a little else where but the record shows that this was at the instance of Standard to test the market, the price. He was required to maintain a bulk storage plant and an inventory on which he paid taxes. He could not represent the sole major brand gasoline. Now, standard is engaged in all aspects of the oil industry from drilling for crude oil to selling gasoline of retail and during the claim period, he had nearly 30% of the gasoline market in the Pacific Northwest. It was the price leader in the Pacific Northwest, selling its gasoline through its own branded dealers, the Chevron and Signal brands and the wholesalers like Perkins and Signal Oil and Gas. Signal Oil and Gas purchased during the claim period its requirements from Standard Oil. Now, Signal Oil and Gas is a large integrated company engaged both in the production of crude oil and the distribution of gasoline in the western United States. Signal has been both a supplier and a customer of Standard since the early 30's. It drew, it supplies directly from Standard storage facilities in near Portland and in Seattle during the claim period and it purchased during that period only from Standard in that area. It reinvoice its purchases from Standard, had no storage facilities, had drove from the Standard bulk facilities, it was in competition with Perkins. It reinvoice to Western Hyway Oil Company which was incorporated in 1950 with Signal owning 60% of its stock. Western Hyway functions as Signal's transportation arm in Oregon picking up gasoline from Standard's Willbridge Terminal in Portland and delivering it to retail stations in Portland operated by the Regal Stations Company. Now, these stations there were three were no more than 150 blocks from the bulk plant and Western Hyway's function was to take its trucks and transport to gasoline to those stations from the Standard bulk plant. Regal was formed in 1956 when with Western Hyway owning 55% of the stock and in 1957, Western Hyway, the Signal Oil and Gas subsidiary acquired 100% of the stock of Regal. It operated three stations in the Portland area which competed with stations owned by Perkins. Now, these stations were set up near the third quarter of 1956 at the time when -- through to 1957 and early 1957 these three Regal stations in the Portland area. At the time when Signal Oil and Gas or when Regal was -- when Signal Oil and Gas which was -- of which Regal was part of the family was carrying on its books, a rebate, an anticipated rebate which was later paid. In fact, the rebate was paid in January of 1957 by Standard to Signal. Signal already and anticipated that and had it on its books and had been negotiations since spring for this rebate. Now, these stations were set up in that time context these three Regal stations in Portland and they immediately started a price war. The Court of Appeals set aside the entire jury verdict in favor of Perkins because some of the petitioners proved on the two-way aspects of his claims, the Section 2 (a) of the amended Clayton Act demonstrated that Signal, the wholesaler obtaining the better price resold the gasoline to Western Hyway who in turn resold to yet another subsidiary Regal. The Ninth Circuit rule as a matter of law that Section 2 (a) of the Robinson-Patman Act “does not recognized a casual connection essential to liability between a supplier's price discrimination and the trade practices of a customer is far removed on the distributive letter as Regal was from Standard.” In other words, the Court of Appeals says, -- said that Section 2 (a) was limited and terms to three levels of cognizable competitive injury and that the injury to Perkins occasioned by Regal's marketing activities did not come within the purview of those three levels limitations. Since, a large part of Perkins' damage was attributable to the activities of Regal which operated at the fourth level distribution. The entire verdict was been deemed tainted and set aside. We respectfully submit that the Court of Appeals aired in so holding. First, the jury properly could have returned the verdict against Standard on the ground that the effect of its price discrimination the favor of Signal may have been substantially to lessen competition in the Pacific Northwest wholesale and retail gasoline market. Section 2 (a) of the amended Clayton Act contains two independent test of illegality. It prohibits price discrimination where the effect may be substantially to lessen competition or to tend, to monopoly in any line of commerce. And then it has another test to injure, destroy, or prevent competition with any person who either grants knowingly receives the benefit of such discrimination, or with the customers of either one of the then. The Ninth Circuit completely ignored the substantiality to lessen competition Standard, a carry over from the original Clayton Act Section 2 and setting aside this jury's verdict.
Potter Stewart: And tried the case on that basis?
Earl W. Kintner: Yes, Your Honor. The -- this was before the Ninth Circuit, it was before the jury, both Standard and Perkins offered charges to the jury and the judge I think substantially and properly charged the jury so that this question of over all injury to competition and tendency toward monopoly was proper before the jury. Now, I would say that that in retrospect, both Perkins and Standard could've been far more explicit and extensive in submitting proposed charges to the jury and the judge perhaps could've been more explicit and could've charged more extensively. But the fact was that the whole question of injury to competition and a tendency toward monopoly was before the jury and the jury even though not as elegantly charged as one -- as some might wish that it were charged was substantially charged and knew what the raise just I was, knew what the questions of fact were, knew what they had to decide. The Court of Appeals exalted form at the expense of economic reality by imposing an artificial three-level limitation on Section 2 (a) to prevent discriminations which tends substantially lessen competition in any line of commerce. It failed to assign any way, the Ninth Circuit failed to assign any way, the fact that Standard's price discrimination has caused a substantial lessening of competition in the Pacific Northwest wholesale and gasoline markets driving out of business one of the areas largest independents. Moreover, by basing that limitation exclusively on the number of persons in the distributive chain established by the favored purchaser, that decision, if the Court please, unless reversed will enable large buyers virtually to insure statutory immunity to suppliers which grant them favorable price concessions.
Abe Fortas: Mr. Kintner, suppose Regal, Western, and Signal had all been totally independent of Standard, no control, no interlocking directorates, no stock ownership up the line, would you still contend that 2 (a) applied?
Earl W. Kintner: I think we have a different factual situation but the realities and petroleum marketing are such that it is the price of the retailer. The competition exist at that retail level and if any one went up that change gets a better price and is able to pass along at the retail level that you can have absolute chaos at the retail level. And this is a business --
Abe Fortas: Well, what I'm trying to get at as I understand that there is stock ownership all the way down the chain here in this case some sort of stock ownership, is that right?
Earl W. Kintner: Yes.
Abe Fortas: And what I'm trying to get at is whether you rely on the facts of stock ownership running from Standard through Regal and Western -- Standard, Signal, Western and Regal that you rely on it --
Earl W. Kintner: We don't have it --
Abe Fortas: -- on that stock ownership or whether you say that even without stock ownership sales by Standard to Signal at a lower price then sales by Standard to Perkins would be a violation of 2 (a)?
Earl W. Kintner: Well, we have alternative theories on this of course depending on how you read the evidence but the -- we believe and I urge upon the Court that these were two families of gasoline dealers and that through the economic realities that the retailers are tied to particular suppliers, the gasoline business and that it wouldn't matter if there was a lack of ownership here and family connection if the discrimination were passed from Signal down to Regal Stations and Perkins who had his own chain of stations was unable to compete. The damage occurred at the retail level because Perkins either had to take a loss or he had to see his stations compete on an unequal basis.
Abe Fortas: Well, let's suppose if you bear with me another few minutes. Let's suppose that Signal were absolutely independent and let's suppose that Standard sold to Signal at “X” and Signal is fire up a distribute of chain wholesaler or whatever its proper term and let's suppose that Standards sold to Perkins retail station direct at “X” plus10% and let's suppose that Signal sold to its retail stations non-affiliate retail stations to its retail customers at “X” plus 5%, am I clear? Are you clear on my example?
Earl W. Kintner: Yes, Mr. Justice.
Abe Fortas: Would you say that that was a violation of 2 (a) by Standard?
Earl W. Kintner: I think you have to go back Mr. Justice to the relationship of the parties with the supplier if the parties were both independent as Signal supplier --
Abe Fortas: That's what I urged in my first question and your answer mystified me a little that's why I bothered you with an elaboration of it.
Earl W. Kintner: Signal and Perkins -- Signal Oil and Gas and Perkins are both independent of Standard Oil. Perkins was required to purchase his oil from Standard Oil and signal did purchase all of its oil from a gasoline from Standard Oil but they were both independent of Standard Oil, they were independent dealers and wholesalers and if the Perkins Company is unfairly discriminated against. It is unable to pass down to its chain of distribution the equivalent benefits that can be passed through by Signal and the proof of the putting is in the eating at the retailer level. Now, I think it makes a harder case if there's a family relationship as there is here and you got alternatives which one didn't have in the Hamm Brewing case where and Duluth and Superior, the distributor -- two distributors of the Hamm Company were unable to compete across the state lines although this was one market. But the superior distributor was given a better price and his retailers then were able to take advantage of the retailers on the other side of the state line and the same market take the customers away simply because the better price was passed on the line at the retail level. As we read it, Section 2 (a) prohibits all price discriminations the effect of which may be substantially to lessen competition in a commercially significant product and geographic market. Regardless of the functional level, this is our theory of the case, it was before the jury and all of the economic setting and the charges given by the judge and it is in this instance that we feel that basically the Ninth Circuit was wrong. And George Van Camp and Sons versus American Can, a 1928 case prior to the passage of the Robinson-Patman Act in 19 -- amendment in 1936 decided -- and decided prior to that amendment. The Court rejected the defendant's argument that its price discriminations could not be challenged by a purchaser because the words in any line of commerce must be confined to the line of commerce in which the distributor is engaged. In other words, confined to what is called primary line injury. The Court ruled if the words in any line of commerce literally were satisfied if a forbidden fact is produced in one of the buries in one out of all the various lines of commerce. The point in the favored purchaser's chain of distribution of which injury to competition is first felt is a concern only with respect to the factual question of causation not with respect to whether the statute has been violated as a matter of law. And we feel that this Court should bring its Section 2 of the Clayton Act in harmony with its interpretations in the Van Camp decision prior to the passage of Robinson-Patman Act and in harmony with its uniform interpretations of similar language of the same language in Section 3 and 7 of the Clayton Act. Standard was a price leader and the principle supplier of gasoline in Pacific Northwest and Perkins was bound to purchase the vast bulk if not all of his gasoline from Standard. It was a market dominated by the majors where the independents had been declining. In fact, Perkins was marketing 8% of Standard's gasoline and one-third of that market to which he was confined and during the claim period he lost 13% of his gallonage, he lost 50% of his fuel oil business which is tied to gasoline as the record shows, and Signal, the distributor, the independent distributor from Standard in whose favor the discrimination was granted, gained 50% during that claim period in gallonage. And as Perkins' expert witness, Dr. Mann testified in response to a hypothetical question covering the same record evidence, the foreseeable market trend in that area was toward increase concentration a decline of small business and a higher gasoline prices and he said this significant to leave which I doubly believe that in other words price discrimination and monopoly are Siamese twins. And Perkins during this period for he went out of business constantly begged Standard for price assistance. It was only one month before Signal's present one on the stand they've been denying they were giving price assistance that they finally admitted a discrimination of $1 million. And Perkins finally got some price assistance, it was a small amount and it amounted for all of his 60 stations to what standard gave one of its branded stations in a 75-day period. Signal was even able during the claim period to offer, to sell to Perkins gasoline at three-fourths of a gallon or on regular and eight-tenths on ethyl. Although, Standard when faced with this denied that it was discriminating in favor of Signal. We submit on a basis of the forgoing that the jury could have found not only that a substantial lessening of competition was threatened but that as a substantial diminution in the vigor of competition had already in fact occurred. And thus, the jury's verdict was affordable on this basis. We do not believe that it was the intention of the Congress in changing only a split infinity in correcting only a split infinity when it pass the Robinson-Patman amendment that it was the intent of Congress to weaken the Robinson-Patman amendment. This Court itself has said quite positively to the contrary in the Anheuser-Busch decision. The legislative history and I quote the opinion of this Court, “the legislative history of these amendments leaves no doubt that the Congress was intent upon strengthening the Clayton Act provisions not weakening them.” The Congress did not intend that that language of regarding competition injury to competition and a tendency toward monopoly should become mere surplusage with respect to the amended Clayton Act. It conferred upon small business a less stringent remedy when it pass that Robinson-Patman amendment but it left the more stringent remedy to those like Perkins who are amply able with an ample record to prove the violation of the original standards of the Clayton Act Section 2. Thank you, Your Honors.
Earl Warren: Mr. Kucik.
George R. Kucik: Mr. Chief Justice and may it please the Court. I will address myself to the questions of causation and damages. The first question is causation and the issue there is simply whether there was enough evidence before the jury from which it could reasonably infer that Perkins' destruction is an independent marketer of gasoline was approximately caused by the price discrimination in favor of Signal Oil and Gas Company. Now, in the context of the Ninth Circuit's opinion in its reversal, the causation period in question which is important for the purpose of this case is a period from September of 1956 through December of 1957 and it involves in the beginning the Portland area in Oregon. The parties the most important parties for Signal which was purchasing gasoline from Standard and Regal Stations Company which was marketing the gasoline in the Portland area. Western Hyway which was repurchasing from Signal was trucking the gasoline to and from that the Willbridge Terminal to the retail outlets. Now, the period as I pointed out is September 1956 through December 1957. Immediately prior to that time, none of the members of Signal's corporate family were in the Portland area. Signal was lifting no gasoline from Standard's Wilbert's terminal. Western Hyway was trucking no gasoline and there were no Regal retail outlets in Portland. In late August, Signal began its first lifting at Willbridge. Regal opened its first station in Portland in September and Western at that time began to track the gasoline. Throughout the period, there was an admitted discrimination in price in favor of Signal Oil and Gas by Standard. It wasn't always admitted or in fact it was hardly contested prior to the deposition of Signal's president but the day before that Standard admitted the discrimination and it's an admitted fact before this Court. So, the price of gasoline was always lowered going into the Signal chain of distribution at wholesale and it always came out lower. Regal consistently underpriced Perkins in the market throughout the period. Indeed, when Regal first opened its station, it dropped retail prices by four cents.
Byron R. White: Well, is it that the legal activity essential and legal evidence essential to prove damages here or through the violation or both?
George R. Kucik: We have said that it was essential to prove both, the Ninth Circuit reversed on the ground that the statute did not encompass as a matter of law the activities of Regal. Therefore, the regal damage is caused by Regal could not become a part of the verdict. We argue that the statute does encompass the activities of Regal.
Byron R. White: Are you saying that the discrimination between Perkins and Signal the prices in which its impact on the competition in adverse impact on competition at the level, do you mean Perkins and Signal is encompass with the adversary?
George R. Kucik: We are saying that, we have an argument --
Byron R. White: Once you show that what else can do you need to show? You have shown the discrimination and adverse affect of competition that the Perkins and Signal (Inaudible)?
George R. Kucik: Well, that is --
Byron R. White: It showed injury and (Inaudible).
George R. Kucik: That's correct. Standard has contested the causation on the -- is contested that the price discrimination to Signal cause Perkins' harm at the retail level and if therefore there was no way which Perkins could've been injured A as a retailer and there was no way which he could've been injured as a wholesaler because his harm as a wholesaler was derivative harm in a sense by virtue of the fact that his retailers were getting beat.
Byron R. White: Do you think this is a -- do you think (Inaudible)?
George R. Kucik: No, no. The Ninth Circuit, Mr. Justice White -- as I read the Ninth Circuit's opinion they decided that it is a straight question of law.
Byron R. White: Well, why did it not get (Inaudible)?
George R. Kucik: Well, we addressed ourselves to this question principally because it is the overriding question in Standard's brief.
Byron R. White: Well, what if we agree to you that (Inaudible)?
George R. Kucik: We think you should decide the causation question.
Byron R. White: Here? That's been decided here.
George R. Kucik: Well, it is arguable that the Ninth Circuit did decide it. The Ninth Circuit has a passage in a footnote 6 of its opinion where it says even granting that there was a price discrimination in favor of Signal and even granting that it was passed on to Regal, we hold that it's not actionable and they went on to give some reason. That can be --
Byron R. White: (Inaudible) that's the argument of causation?
George R. Kucik: Well, the reason why we think it's arguable that that was a holding on causation was there was no question. There was no need for an aguendo on the question of the discrimination that was admitted. So, you can fairly read that passage as a holding by the Ninth Circuit that there was causation. In any event, the jury verdict was presumably based on a jury finding of causation. And the Ninth Circuit's opinion arguably can be read to affirm that verdict. We address ourselves to it merely to show that Standard's objection is not substantial that there was overwhelming evidence from which the jury could've found causation and that it is not -- it is not a question of such importance that it need to deter this Court from addressing itself to the major issue and to reinstating verdict.
Byron R. White: (Inaudible)
George R. Kucik: Well, Mr. Justice White, I read their brief and I think some of that doesn't come out here. I will be willing to but it would have been redundant. I think that the causation point was by for the most important point stressed in Standard's brief.
Byron R. White: (Inaudible)
George R. Kucik: I'm not precisely sure what Standard would like this Court to do. I think --
Abe Fortas: At what price level do you think Standard should have sold Perkins in order to avoid violation of 2 (a), the same price that sold Signal?
George R. Kucik: Yes.
Abe Fortas: Is that because Perkins was a wholesaler?
George R. Kucik: Both Perkins and Signal were wholesalers in the Pacific Northwest.
Abe Fortas: Is that the reason why they should've been in your theory they should've sold -- Standard should've sold Perkins at the same price as Signal?
George R. Kucik: Was I understand Section 2 (a) unless you have -- unless there are reasons for discriminating in price reasons cognizable under the statute you sell to all direct purchasers at the same price.
Abe Fortas: Suppose you mean --
George R. Kucik: There's no reason.
Abe Fortas: -- you mean, let's suppose Perkins was not a wholesaler at all but Perkins had one gasoline station selling at retail, does your in its purchase directly from Standard, is it your theory of 2 (a) that Standard will have to sell to Perkins retailed gasoline station that the same price as it sold to Signal which was solely a wholesaler and distributor.
George R. Kucik: Well, to that point Mr. Justice Fortas I would think it could probably be cause justified or justified on --
Abe Fortas: Unless its cause justified, your theory is that there's no place under 2 (a) for any so-called functional price differences.
George R. Kucik: Well, that really is in -- an integral part of our argument because the question isn't raised here both Signal and Perkins were operating on the same functional level. They were both wholesalers in the Pacific Northwest. Perkins described himself as a wholesaler and there was testimony of an expert marketing witness as to (Voice Overlap).
Abe Fortas: How much of Perkins purchases from Standard that it sell to anybody other than itself?
George R. Kucik: Well, --
Abe Fortas: The record show?
George R. Kucik: Well, Perkins sold to retailer -- sold to independent distributors. It also sold to retail stations, some of the --
Abe Fortas: So how much of it did it sell to anybody else than its own gasoline stations?
George R. Kucik: There is no breakdown in the record Your Honor of the --
Abe Fortas: Suppose it sold to nobody except to its own gasoline stations, does that have an effect on your theory as what would happen under 2 (a) on your theory?
George R. Kucik: No, it does not Your Honor because the theory depends upon Perkins' function. Perkins was a very real wholesaler, he operated bulk plants, he had his own trucking facilities --
Abe Fortas: Well, all the damages that are involved in this case are alleged to flow from injury at the retail level, is that right?
George R. Kucik: The damages based -- the damages -- the Ninth Circuit reversed because of its feeling that the damage is attributable to Regal. We're not fairly comprehended within the verdict. Those would be damages at the retail level. Perkins has damaged computation exhibits however, contained evidence of the loss in going concern value of this entire enterprise as well as evidence as to all points.
Abe Fortas: Well, I understand that but was the damage allegedly incurred at the retail level?
George R. Kucik: Insofar as -- yes, insofar as this theory is concerned, yes. That is what we're concerned about. We're concerned about the harm cause, the retailers serviced by Perkins, be the independent retailers or be the retailers operating stations owned by Mr. Perkins.
Abe Fortas: Well, then I suppose your theory has to be that element of causation here that causation question as it follows that the damage suffered by Perkins' retailed gasoline stations was caused by the discriminatory low price at which Standard sold to Signal which enabled to Signal through Western to supply Regal with gasoline at the price which enabled Regal to cut below Perkins' price if you follow me, is that correct?
George R. Kucik: Your Honor, that would suppose of it very concisely. We do believe that there was substantial evidence which the jury -- from which the jury could've found that that did happen that the price differential did go down through the distributive chain. But in view of the integrated nature of the chain, we don't believe that the jury had to trace the price at every level. But that question again is not necessarily presented because of the substantial evidence to support Your Honor's formulation.
Abe Fortas: Can you illustrate the difference in price charged to Signal and to Perkins, about how much was it?
George R. Kucik: Well, --
Abe Fortas: About how much was it?
George R. Kucik: Well, the difference, there are some dispute as to this, the price difference is admitted. Standard contends that the dispute amounted to between 45 – 45 one-thousandths of a cent to approximately 65 one-thousandths of a cent per gallon.
Abe Fortas: In the price charged to Signal and on the one hand the price charged to Perkins on the other hand?
George R. Kucik: That's hundreds, I'm sorry Your Honor I had that wrong. That's -- it was approximately half a cent to approximately seven-tenths of a cent. We contend that at the very lease a free factor has to be added back into those figures which we paid -- which would increase them to approximately eight-tenths of a cent to a penny.
Abe Fortas: You mean to say that -- you're saying that 2 (a) requires for the delivered price even if the gasoline is not so alone in delivered basis that you got to equalize them on the price, net price to the allegedly competing buyers on a delivered basis.
George R. Kucik: Well, Your Honor it comes up in this way, the Portland-Vancouver area, under the evidence, is an integral marketing area. Standard's terminal was in Willbridge which is in Portland. There was a price to Signal which lifted at Willbridge and it was at priced to Perkins which lifted at Willbridge. The Perkins -- Standard, Perkins though had to transport his gasoline across the river because his stations were in the Vancouver area within the same trading area, within the same relevant market but across the river. That cost him approximately three-tenths of a cent per gallon of gasoline and Standard gave him an allowance for that but Standard deducts its allowance from his price. We contend that since he had to pay to freight anyway, there should be no deduction from the price he paid Standard and therefore the prices should be equalized at the price in Willbridge. But there's an additional factor on this as Mr. Kintner pointed out there was evidence in the record that Signal offered Perkins during this period a price which ranged from 75 one-hundredths of a cent to eight-tenths of a cent better than the price Standard offered Perkins. And Standard at that time was supplying all of Signal's gasoline. Now, the jury could've inferred from that if you believe respondent's price discrimination figures that Signal was selling to Perkins at a loss and was willing to do so. Or the jury could've believe that Signal was going to make a profit on these sales which would've meant that they would've been getting a better price then either party have been able to demonstrate the upper limit of it would not be able to be determined on the record but the jury was certainly not bound to find that the prices are set forth in the schedules and the amounts of the differentials are set forth in the schedules where the only prices. Beyond this, it's a very substantial -- it comes to be a lot of money. Perkins sold over 20 million gallons of gasoline during the claim period. A half a cent per gallon would've been a $100,000.00 which should have made the substantial difference in his ability to remain viable. During the time, during this period, Standard was giving as I pointed out this lower price to Signal. Standard also was providing price assistance to its branded dealers who competed with Perkins at retail. Now, the branded dealers were independent operators of Chevron and Signal stations, the Signal stations being independent of Signal Oil and Gas Company. They were purchased from Signal Oil and Company by Standard in the late 40's were operated as a division of Standard. Standard gave price assistance to those branded dealers both in Portland and located many miles distant from Portland. The result was that the market went down even further and stayed down precisely because Standard was the price leader in the area. There is testimony in the record that when Standard dropped his prices or raised its prices other companies could not alone remain at equilibrium. They had to go that way as one Shell dealer testified. It was the Signal brand the dealer that he looked to when there were two retailers under pricing him in the market. So this was a further depressing effect and it was one which caused the market to stay down. Now, the Ninth Circuit reviewed the facts underlying -- the Ninth Circuit reviewed the facts involved in most of this situation. The Ninth Circuit pointed out there was substantial evidence in the record that Regal cause the price worst, that those price were spread throughout the Pacific Northwest, and that Perkins had demonstrated that those price worst at harm did. In his business, it adversely affected him causing his ultimate destruction. Now, petitioner was harmed in two ways, he lost customers and his sales declined. He was selling gasoline as a minor Standard would not permit him to testify and I would not permit him to advertise that he sold of major brand gasoline. The accepted major-minor differential was two cents. At times during the period involved here, Mr. Perkins was unable to keep his price two cents below unless he was willing to absorb great losses, he ended up one cent below the majors, he ended up even with the brand of dealers at times. When he did that, he lost sales, when he maintained the differential he lost -- when he maintained the differential he lost profits on the sales he did make either way, he was cut. Perkins went to Standard during the period and asked them for assistance. He said, he will be willing to take assistance at the wholesale level for the same type branded Signal and getting the same price or else he would appreciate getting some assistance comparable to that being received by the branded dealers at the retail level. Standard not only declined to give him the assistance, they denied that they have been giving price assistance to the branded dealers or that they had been discriminating him price in favor of Signal. As a result, Perkins received no help and he went out of business. Now, there was evidence before the jury and this is the evidence I referred to before is the evidence of passing on. There was evidence before the jury that Signal wanted a lower price from Standard precisely so that he could give that lower price to its customers. The price didn't just happen, it was negotiated and it was negotiated at the behest of Signal. Signal had Standard in somewhat of a box because Standard was dependent on Signal's crude oil to run its refineries. So Signal kept insisting on a better price. During those negotiations, the Signal negotiator who was there marketing vice president pointed out that and he took the position that unless he had a lower price, he couldn't pass it on. After he got the lower price and after Regal entered the Portland area two Standard executives acknowledge that Regal had a better price than Perkins in the Pacific Northwest. And they predicted that unless Standard did something to alleviate the situation, Regal would wreck that market and they were right. Standard also knew of Perkins' position, Perkins had told him and unless they held him not only was the market going to be wrecked but he was going to be driven out of business as he pointed he told them that he couldn't live under the existing arrangement and that too turned out to be true. He went out of business. It is our feeling that this -- there was substantial evidence before the jury on which the jury could've based the finding that it was the price discrimination in favor of Signal supported by the price assistance to the branded dealers which approximately cost Perkins' destruction that the jury in short could've inferred the same causal connection which Standard executives have predicted. The remaining issue was one of damages. The evidence that I have discussed on causation proves the requirement of legal harm, Perkins was injured, he went out of business, he lost sales and he lost profits. And there was substantial evidence before the jury from which the jury could've inferred the amount by which he was injured which is the remaining requirement that he must meet. His evidence of damage included his business records for the entire claim period, his purchase invoices for the claim period, his sales invoices with of his lost customers mainly distributors, it contain evidence of his declined in gallonage. It contained evidence that he could've increased the sales above what he was selling during the claim period without any additional cost. The record contained evidence of the amount of gross profit Perkins was making during the claim period. Contained evidence of his expenses. It also contained evidence of the minimal gross profit necessary to survive as an independent jobber in the Pacific Northwest. It contained evidence of the amount of the price differential and it contained the formula by which the jury could ascertain the going concern value of Perkins' operation where they defined that it had to go in concerned value. Now, the Ninth Circuit did not rule that there was not substantial evidence to support the jury verdict or left their -- the amount of the award was unreasonable. The Ninth Circuit ruled contrary to Perkins on one damage item. It held that there had been evidence improperly admitted as evidence of damages and that this evidence was evidence of brokerage commissions which Perkins had not been paid by these corporations for getting them gasoline, an evidence of loss rentals from retail stations. Now, a little bit of history is necessary to explain that. This was a lawsuit brought on behalf of Perkins as an individual and two corporations which he had formed to run his business in the 50's. The evidence demonstrates the Standard never recognized the corporations and they dealt with Perkins independently. But when the lawsuit was filed, Standard insisted that the corporations bring the suit and there were assignments in the corporation suit in addition to Mr. Perkins. In that context, Mr. Perkins has been trying to prove that he had standing to sue as an individual and that he had suffered legal harm introduced evidence of these items of -- these items of proof, the brokerage and the lost rentals. He introduced them to prove that he had standing. That issue wasn't in the case anymore because the district judge charged the jury that Mr. Perkins was a purchaser from Standard and that is not contested but that is how it came in. Our answer to that point is that the evidence was not introduced, this evidence have damages that it was introduced as evidence of legal injury and that in any event it could not have misled the jury because it was not included in Perkins' damage computation exhibits nor was it included in the judge's detail charge on damages as one of the items which the jury might properly consider. And just one final point, it is important, I think, that Standard argued this point at great length of the Ninth Circuit, the point at which the Ninth Circuit ruled at first in Perkins are damage question. But they don't say a word in defense of it here. Here, they take a different attack and they suggest that there are many other errors which preclude reinstatement of the verdict. We discussed those in our reply brief but it is our position that none of those errors, the errors which the Ninth Circuit didn't see fit to discuss are of any greater substance than the errors discussed in the reply brief and indeed, that our reading of the brief fails to disclose any significant differences between the issues raised in the brief and the issues in the specifications of errors more elaborate but essentially the same questions. We respectfully submit that this Court should reverse the judgment of the Ninth Circuit and affirm the judgment of the District Court.
Earl Warren: Mr. MacLaury.
Richard J. Maclaury: Mr. Chief Justice and may it please the Court. At the outset, we emphasize that this is not case of predatory or widespread discriminations aimed by Standard at eliminating a customer. To the contrary, in the 1950's, petitioners and some four or five other jobbers were important customers of Standard in the Northwest. These jobbers accounted were a large percentage of Standard's sales in that area, enabled Standard to gain access to a market, it could not otherwise reach and this was a market comprise of people who thinks they don't buy major brand gasoline. They prefer to purchase minor brand gasoline from the local dealer. In these circumstances, there was absolutely no commercial risk why Standard should wish to drive whether of its customers in the market. Predatory pricing after all is associated with the marketer who attempts to enhance his position in the market. But after all when Perkins terminated his contract with Standard, it was Union Oil Company of California gasoline that was sold through his stations not Standard's and certainly that was not a situation that Standard sought to instigate. And similarly, it was not in Standard's interest to instigate widespread price loss which would cost the company vast sums of money by way of prices assistance to its dealers. This case involves three basic claims. One is the discrimination in price of the gasoline to Signal. Two, the claim discriminations in the price of gasoline to Standard's branded dealers; and three, the Section 2 (e) and 2 (d) discriminations in favor of branded -- of Standard's branded dealers. Now, as to Signal, there are two claims. Counsel so far I believe it mentioned only one. It was the claim in the Centralia-Seattle area and there was a claim in Portland-Vancouver area. The facts are that in 1955, Signal first purchased gasoline from Standard in Seattle. There, Perkins was buying gasoline but it was Union's gasoline which Perkins purchased through Westway and Perkins competed with Signal's customers Harris and others in Seattle but he competed with Westway gasoline or Union gasoline not Standard's gasoline. Now, some 80 miles to the south of Seattle there's a small town in Centralia and there Perkins had a customer named Carter and it was claimed that Signal reached out to one of its wholesalers and took this customer Carter away. The facts are that neither Signal nor any of Signal's customers ever sold any gasoline in Centralia. Now, the second market involving Signal is Portland-Vancouver. Signal commenced buying from Standard, in Portland in August of 1956. Signal resold all of this gasoline to Western Hyway. Signal by the way had absolutely no stock with ownership connection with Standard. Western Hyway was owned 60% by Signal and the remaining of the stock was owned by Western's corporate officers. Western sold all of this gasoline except for a minor amount which is not pertinent to this lawsuit, the three Regal stations in Portland. Those Regal stations were owned 55% of the stock by Western and the remainder by persons having no connection with Western. The important fact is that when Regal opened the business in Portland in September, Signal was paying Standard a higher price for gasoline then Perkins was paying. And at all times in this lawsuit from September from 1956 until June of 1957 the price paid by Western Hyway, Regal supplier the gasoline was higher than the price paid by Regal. I say that was until June of 1957.
Abe Fortas: Price paid by Regal?
Richard J. Maclaury: The price paid by Regal, excuse me, when I said that I misspoke myself. The price paid by Western Hyway Regal supplier for gasoline was higher than the price paid by Perkins. There was no evidence in this case of the price paid by Regal. After November 1, 1957, Western's price was some 35 ten-thousandths of a cent higher than the price paid by Perkins. So the summary on Signal is that Signal never sold to a retailer and Signal never sold through its wholesaler or directly to anyone in Centralia.
Byron R. White: Did Signal sell to anybody or offered to sell to anybody to -- that Perkins wanted to sell too? Were they in competition?
Richard J. Maclaury: No. The situation in neither market was not true Mr. Justice White. The situation in Seattle was that Signal sold to one B.F. Harris, a jobber the same as Perkins. Perkins and B.F. Harris in Seattle sought the business of one Carter in Seattle.
Byron R. White: Yes, but weren't the Perkins' interests -- weren't the Perkins -- what were the Perkins interests, wholesalers and what do you call them distributors or jobbers or both?
Richard J. Maclaury: Well we –- technically, we would call them jobbers but Mr. Justice there are (Voice Overlap).
Byron R. White: Or wasn't Signal a jobber?
Richard J. Maclaury: No, Signal, we would not call a jobber. Signal was an integrated oil company. It was more on the level of standard but it sold wholesale to jobbers.
Byron R. White: That's what I mean it had a jobbing department if you want to say that. I mean it sold in wholesale?
Richard J. Maclaury: Yes, it sold in wholesale.
Byron R. White: And Perkins sold a wholesale?
Richard J. Maclaury: Perkins sold at a wholesale level.
Byron R. White: Well, were they in competition or not?
Richard J. Maclaury: No, I would say that Signal and Perkins was not in competition.
Byron R. White: They weren't speaking any -- they weren't selling in the same areas or they weren't selling the same customer?
Richard J. Maclaury: They weren't selling the same customers if I may analyze that for you.
Byron R. White: You mean Perkins wouldn't have thought of selling one of Signal's customers that he could've gotten?
Richard J. Maclaury: That is what I'm saying and I'd like to go to Seattle market --
Byron R. White: It's very odd isn't it?
Richard J. Maclaury: No, it's not in this circumstance. We go to take Portland for example, Signal sold only to Western in Portland. Now, as to Portland --
Byron R. White: Well, I know but --
Richard J. Maclaury: -- Perkins had by agreement in contract with the others who would sign Standard contract with them precluded himself from selling gasoline in Portland. Perkins gave the Portland market to file and harass his cosigners on the contract with Standard. Secondly, Perkins sold to distributors such as his nephew in Vancouver and sold to dealers who would tie to him by leases or to dealers where he owned the retail stations. And so there was narrow any competition between Signal and Perkins for the business of Western.
Byron R. White: Well, with Western but how about generally?
Richard J. Maclaury: You know generally speaking, --
Byron R. White: You mean Perkins wouldn't -- Perkins could've gotten some of Signal's customers that Perkins wouldn't have sold them?
Richard J. Maclaury: No, as a practical matter, Perkins could not have taken Signal's only customer in Portland and Signal had only one customer in Portland and that was Western Hyway.
Byron R. White: Would you think it ever would have wanted another one in Portland?
Richard J. Maclaury: As matters developed, I don't know the record doesn't show that the time that Perkins went out of business, Signal still had one customer in Portland and that was Western Hyway and as I say Perkins had precluded himself from seeking that business by contract with his cosigners under Standard agreement.
Byron R. White: Now, you're just saying, here are two wholesalers of gasoline, of comparable gasoline selling in the same area and you're saying that we should -- that we must accept the fact they are not in competition?
Richard J. Maclaury: Well, I say that they are not in direct competition for the same business in the same place and the same time. I think that's the definition of competition, generally accepted under Robinson-Patman. Now, I might refer to this Court's decision in Fred Meyer. There, the same concept of competition was suggested. Fred Meyer, as the Court will recall, involved the 2 (d) claim of discrimination. The manufacturer sold to a direct buying retailer and also sold to a wholesaler. The Federal Trade Commission suggested and argued that because the wholesaler was really competing for the same customer's dollars as the retailer. The wholesaler was entitled to the same promotional payments as the retailer was getting. But this Court rejected that concept of competition and said specifically that despite the broader term distribution used in Section 2 (d) which is broader term than the term resale in 2 (a), the Congress did not intend the word “competition” as used in the Robinson-Patman Act would have that broad meaning. Going to the Seattle market, there, Signal sold to jobbers who were on the same level as Perkins and I've mentioned one B.F. Harris and B.F. Harris and Perkins were certainly competing for the same business but Signal and Perkins as a practical factual matter as the record shows that they were not.
Hugo L. Black: May I ask you on -- I'm a little confused by --
Richard J. Maclaury: Yes.
Hugo L. Black: -- your statements here? This lawsuit seems to be on the basis that some how Standard is selling to Signal or someone else who competes -- with the Perkins or who competes with somebody that Standard has written to sold the order so it did suffer damages. I don't get it from you how they would suffer in to damages at all as counselor, is that your idea?
Richard J. Maclaury: Well, I don't believe, my -- our position here of course that Perkins did not suffer any damage whatsoever from Standard sales to Signal switching to the Portland market and to follow up Your Honor's question. There, the market is structured this way, Standard sold to Western, Standard sold to Signal, Signal sold to Western, Western sold to Regal which was a retail outlet. Regal did in fact compete with some of the stations supplied by Perkins across the river in Vancouver. And it was said at that level where we had the competition. It was there where there was head to head competition for the dollars of the same customers.
Hugo L. Black: There was real competition there?
Richard J. Maclaury: There was real competition. We must acknowledge that at the retail level and our whole point here and the only real matter decided by the Court of Appeals was that because that competition which Perkins asserted injured him was at the fourth level and because Congress did not extend the Robinson-Patman amendments down to that fourth level, Perkins was not entitled to recover here for any injury that may have been caused to him by Regal assuming that Regal did cause that injury. Do I answer your question Mr. Justice?
Abe Fortas: It got a different result if you regarded the stock ownership of Regal and Western as creating a sufficient identification with Signal weren't you?
Richard J. Maclaury: Well, if I understand Your Honor's question, my answer would be this, that because the operating people making the operating decisions in Western, making the price in business in Western owned 45% of the stock and because they were making the decision, I would expect these decisions to be as much in the interest of these independents as it would in Signal.
Abe Fortas: Well, maybe but maybe not because you have 55% of the stock of Western that was owned by Signal, is that right?
Richard J. Maclaury: Well, 60% Your Honor.
Abe Fortas: 60% and then how much of the stock of Regal was owned by --
Richard J. Maclaury: Western.
Abe Fortas: --Western?
Richard J. Maclaury: 55% Your Honor.
Abe Fortas: 55% so you had a chain of theoretical control anyway all the way down from Signal through Western through the stations and you therefore, one might assume what kind of an independence of pricing judgment but then one might not depending upon one's election I suppose.
Richard J. Maclaury: Or the facts and Mr. Justice Fortas I'd like to pick up the facts on that situation. First, we go to the Court of Appeals' finding that there was no evidence in the record of operational control and then we look at the invoices from Signal to Western and there's all every invoice, every sale representing every sale from Signal to Western is in this record. They are summarized at page 22 of our brief and they show that the prices to Western were higher than the prices of Standard to Perkins. And so, Signal in other words took that price differential of some less than a half of the sale which would receive by the way only after January (Voice Overlap) to put in his pocket.
Abe Fortas: Some people think that no situations one might suspect that, what's lost on the peanuts is made up on the bananas; sometimes it works that way too.
Richard J. Maclaury: Yes, but I don't understand how that could happen here --
Abe Fortas: Because of the 55% ownership and depending upon how it just how one aggregate sold the various interest are entered into this common pool if you want to regard it as a common pool of ownership and financial interest. That's -- that to me is going to sticky problems in this case that's why I was asking your colleague that whether they had make a difference -- I mean your adversaries to where they had make a different analysis of this case if there were not this thread of more that majority ownership running from Regal to Western to Signal. And here you do have that thread of more than majority ownership that runs right through and the question is what if any bearing that should have on the intricate problems presented by 2 (a) in this situation.
Richard J. Maclaury: I think petitioner who puts his finger right on it in his brief when he states that the question of control, Mr. Justice Fortas, is a question of fact. Now, this fact, this issue control was never passed on to the jury. It was never submitted to the jury. We suggested an instruction which would ask the jury or instruct the juries that one of the issues here was whether or not this price differential was passed on and the Court refused to give that instruction.(Voice Overlap) so the jury really never decided this question.
Abe Fortas: Let me see if I can get at your theory which is what I'm trying to understand in a very simple illustration. Let's suppose that Standard sold to Signal which resold to stations -- independent stations and let's suppose that Standard sold to Perkins which resold independent stations, and let us suppose that Standard sold to Signal at a lower price and let us suppose if the customers of Signal and of Perkins were in the same competitive area, violation of 2 (a) prima facie.
Richard J. Maclaury: Well, depending on whether the impact there would probably be on the third level but certainly a possibility of violation of 2 (a) depending on impact.
Abe Fortas: Right. Now, the question is whether this is to be regarded as that sort of a case, that's one of the questions here and I understand what you say about control, question whether it is controlled or which we should look or the majority or the extent of stock ownership as distinguished from operational control? I think that's one of the novel questions as far as I know it's a novel question that at least in degree that this case presents.
Richard J. Maclaury: Of course, in every other field of the law for example, in creditor's rights. Where a creditor wishes to attack the separate corporate identities of two corporations, it is the burden on the creditor to show that there is an alter ego situation here and I don't see why the situation shouldn't be the same here. So far as the back -- that Signal owned a part of Western and that Western owned the part of Regal, that would make no difference whatsoever if there was, if each of these entities did operate independently. It will be exactly the same situation as Standard had sold to Signal and that Signal had sold to a completely different independent identity and in turn it sold to a completely independent identity. The only question is the question of fact, this petition has points out and there was no evidence to overcome and I think the presumption should be was that these entities were truly independent. The --
Byron R. White: Did the Court of Appeals in by deciding at the way it did at least implicitly decide that there was no control?
Richard J. Maclaury: No, I think but the Court of Appeals --
Byron R. White: Well, they said that --
Richard J. Maclaury: -- there was no evidence on it and they left that open for retrial. They left that issue open for retrial.
Byron R. White: Yes, but the Court of Appeals said that it doesn't extend to fourth line situations, the Act of --
Richard J. Maclaury: That's correct.
Byron R. White: Well, it wouldn't have been a fourth line situation if there'd been control?
Richard J. Maclaury: That is correct. I agree with that.
Byron R. White: So, and yet it reversed so it just said that -- if you said that there -- that unless the control was proved the act didn't reach this?
Richard J. Maclaury: That's correct.
Byron R. White: It left open control --
Richard J. Maclaury: It left the question of control opened and specifically stated in response to the petition rehearing that that question is open for retrial.
Byron R. White: So, they didn't at least they didn't decide it?
Richard J. Maclaury: No, they couldn't decide it because there was no evidence on the question of control.
Byron R. White: And without proving -- without proving control they decided that this was a fourth line situation covered by the Act?
Richard J. Maclaury: That's correct. That's precisely the only holding on 2 (a) that the Court of Appeals made. Now, --
Byron R. White: Well, now would you say that -- and you say that the effect on the line of commerce in which Perkins was engaged is not in this case?
Richard J. Maclaury: I don't believe I understand Your Honor's question.
Byron R. White: Well, --
Richard J. Maclaury: Certainly, his line of commerce is involved.
Byron R. White: Well, he felt that the Court of Appeals said that 2 (a) doesn't exist because it's fourth line?
Richard J. Maclaury: Yes.
Byron R. White: And the petitioner says, well, the Act says that if there's an adverse effect on any line of commerce. Now, what about the line of commerce and which Perkins was engaged?
Richard J. Maclaury: Well, I entirely agree with petitioner that had this case been submitted to the Court of Appeals under the original language of the Clayton Act and why is that --
Byron R. White: (Voice Overlap) submitted in the District Court to the jury and the instructions were certainly broad enough to submit this issue to the jury?
Richard J. Maclaury: Well, clearly -- I would say this, I agree with the legal proposition that the original language of the Clayton Act has no limitations in so far as level is concerned, so far as Van Camp is concerned that case, that issue was decided if there was a substantial lessening of competition on any level --
Byron R. White: That's right.
Richard J. Maclaury: -- why that case that that's the end of this lawsuit. Now, to come back Your Honor's other suggestion that it was submitted to the jury, I don't agree with petitioner's point of view on that at all. I was in the trial of the case, the case would never focus on a general lessening of competition in the market. It is perfectly true that --
Byron R. White: Do you think it focus on showing a lessening of competition with Regal?
Richard J. Maclaury: It --
Byron R. White: That's the verdict.
Richard J. Maclaury: Yes.
Byron R. White: And that Regal -- Regal cut prices and therefore competition with it was lessened?
Richard J. Maclaury: Yes. Competition would -- Regal was lessened and Perkins himself was injured rather than in entire market.
Byron R. White: Instructions to the jury didn't focus on that either?
Richard J. Maclaury: Well, the instruction to the jury did focus on that in that, it named very specifically to the competitors of Perkins who would be Regal, Signal, Western, and the dealers.
Byron R. White: Yes, but it didn't identify -- it didn't say -- it didn't ask the jury to focus on saying, you must find that the competition was Regal was lessened?
Richard J. Maclaury: No, there's -- I have no quarrel with petitioner on this at all. It appears that those instructions appears at page 54. They were given in the alternative, the jury was told that it must found -- find and I'm reading at second line, to that the reasonable probable effect of the discrimination may have been to substantially lessen competition and then in the disjunctive or tend to create a monopoly in the line of commerce or --
Byron R. White: That's right.
Richard J. Maclaury: -- then Robinson-Patman and to destroy or prevent competition with Perkins of Oregon, etcetera, etcetera.
William O. Douglas: You told Justice White as I recall it, there's no evidence in Signal control Regal?
Richard J. Maclaury: There was no evidence that Signal controlled Regal.
William O. Douglas: How naïve do you want us to be? There's a majority stock ownership isn't there in these companies?
Richard J. Maclaury: There is a majority stock ownership Mr. Justice.
William O. Douglas: What would you want to -- what standard would you have for control? We've had cases here for 1% of stock ownership that has been tantamount to control.
Richard J. Maclaury: I don't think there's any question as the Court of Appeals pointed out that Signal was in the position to control Western and that Western was in the position to control Regal. But there were no interlocking directors and there was no demonstration of actual control. I'm not saying (Voice Overlap) --
William O. Douglas: Who control the majority stockowner doesn't control, who control who?
Richard J. Maclaury: The offices of the corporation who are operating the corporation control the corporation.
William O. Douglas: And they are not elected by any stockholders meeting?
Richard J. Maclaury: They are elected at the stockholders meeting and speaking yes. But I think it's especially significant here that the minority stockholders of Western were the operating officers and you would expect them as they did often rate that company against the best interest of Signal when they were purchasing gasoline from others than Signal and deprive Signal of its wholesale profits what Signal should grant.
William O. Douglas: It comes to me a person who is not entirely ignorant of the corporate seal that majority stock does not control. Perhaps that could be shown by in some way that majority stock does not control, wasn't under any trust though?
Richard J. Maclaury: No.
William O. Douglas: Locked up?
Richard J. Maclaury: No. No, but there was no evidence that the president of the chairman of the board or any officer of Signal directed the pricing decisions of Western. In absence of that kind of evidence, you would expect that Western's pricing decisions will be independent.
William O. Douglas: I would just assume that in the family of nested corporations that they wouldn't have to have any evidence. Things go along as the top company wants him to go or else there's a change.
Richard J. Maclaury: That assumption might be valid Mr. Justice Douglas but here in this case we had quarrels between the owners of Signal, the majority owners of Western and the Signal operating officers as to where they would buy their gasoline and Western insisted that they have buy their gasoline wherever they could get the cheaper price even though this deprive its parent of its wholesale profits. And that would indicate to me a lack of control. Now, they say before, I'm not assuming for a moment or suggesting for a moment as the Court of Appeals pointed out Signal was in a position to control but there was no evidence that it did and --
Byron R. White: But minority holders of Western --
Richard J. Maclaury: Were in control.
Byron R. White: -- position, the minority stockholders of Western were also I suppose rather interested in having accompanied by (Inaudible)?
Richard J. Maclaury: Yes, whether it was purchased from Signal or wherever else they could get it, fortunately. They were certainly weren't going to operate that company so as to advantage the minority of the majority ownership in Signal if they could avoid it and they did avoid it. Going back to my argument is that, we have no disagreement here that the original language of the Clayton Act extends to all levels of competition. Our point here is that this standard was presented to the jury in the alternative. Certainly, the standard of the Robinson-Patman Act provisions was more or less onerous burden in the standard of the original Clayton Act and one would expect that the -- having a choice the jury would make the decision in -- on a basis of the -- or simplified unless onerous Robinson-Patman amendments. But before the Court of Appeals, our objection here to raising this problem here is not a technical one. The matter was not presented to the Court of Appeals. It was not briefed to the Court of Appeals. The Court of Appeals never had an opportunity to define this market either on a functional basis or on geographical basis. There are other jobbers in the Northwest supplied by competitors of Standard. There was no showing of the impact of Signal's operations of these other jobbers or on the retail outlets of the other jobbers. The only showing of an impact at all or an adverse effect of all was on the competitor Perkins and that's the limit of the finding of the Court of Appeals in its footnote 6. So, I don't disagree with the proposition of law but my only suggestion is that this Court has before it the abstract question of whether or not the standard of the original Clayton Act is limited to the fourth level or to the third level or to the second level. The answer to that is no, Van Camp settled that and there isn't a record here that would support a holding that the original Clayton Act should apply here in this case.
Abe Fortas: Suppose Signal owned the 100% of Western which is still had no evidence of control in your sense say the issue in some orders to management, suppose the facts or otherwise is saying and suppose Western owned the 100% of Regal saying with the factual on the same, would you still think that this case truly raises the question of -- that we would have to decide the question of fourth level of our petition?
Richard J. Maclaury: Yes Mr. Justice Fortas, I think you would. I don't think there's a matter of degree of control. I think petitioner has put his finger right on the question. It's a question of fact in every case.
Abe Fortas: Well, that's where a petitioner put his finger?
Richard J. Maclaury: Yes.
Abe Fortas: Yes.
Richard J. Maclaury: And that's where I'm in agreement with them at least on that --
Abe Fortas: I think you would, yes.
Richard J. Maclaury: Otherwise, we would get in there. It seems to me the rule would be so vague whether it would be 30% control, 50% control, 75% control and despite these percentages the factual situation may vary on each one of this.
Abe Fortas: Usually 50% is considered sort of a dividing line, isn't it? For me, a clear dividing line sometimes 40% or less than that may also be significant but 50% usually considered pretty significant.
Richard J. Maclaury: Well, it probably --
Abe Fortas: In many event, I suggest to you that -- that's why I was asking of those questions of mine because I -- they have it might be, I don't know it may be though that this case does not require decision about the fourth level of the distribution channel for that reason.
Richard J. Maclaury: One other aspect to the fourth level point that we have here. There is no question at all that the plain language of the Robinson-Patman amendments limits the impact to the third level. It declares a price discrimination, a violation of law if there is a lessening of competition with the grantor, a lessening of competition, a second level of the recipient or thirdly, a lessening of competition at the third level with the favored buyer of the recipient in this case Western. The plain language of the statute limits it to that level, this Court held in Standard Oil, Congress knew very well how to designate the levels of competition which intended to protect.
Byron R. White: Do you think the statute when it says lessening competition in any line of commerce; do you think that's the same standard as saying lessening competition with a customer?
Richard J. Maclaury: No, I do not think it is the same standard.
Byron R. White: No, isn't it, is it?
Richard J. Maclaury: Two reasons.
Byron R. White: And so you could have any line of commerce could apply to the fourth level?
Richard J. Maclaury: It certainly would and (Voice Overlap).
Byron R. White: Yes, but different standard than just preventing or lessening competition with Regal?
Richard J. Maclaury: Correct. Then, it would have to be a general depression and lessening of competition in the market generally.
Byron R. White: That's right.
Richard J. Maclaury: And there was no evidence of such an effect in this case.
Byron R. White: And before you could show a lessening competition with Regal, the Act doesn't cover that?
William O. Douglas: Well, that's our question, isn't it?
Byron R. White: I mean that's what your argument is. That's what the court (Voice Overlap) --
Richard J. Maclaury: That is correct.
Byron R. White: But if you could show lessening of competition --
Richard J. Maclaury: Generally.
Byron R. White: -- in the line of commerce Regal was engaged in the Act would reach it.
Richard J. Maclaury: I think that's correct. Yes, Your Honor that is correct.
Hugo L. Black: May I ask you a question? I'm still little confused about all these levels, but I would like to know suppose evidence had shown, I don't know what it shown that Standard was selling any line which carried this through a challenge that would reach Perkins and put him out of business because of the prices of Standard was knowing to sell it and Standard knew that it would do that, would that violate the law?
Richard J. Maclaury: I would have to say to the general question no Mr. Justice but let me make sure that I understand the question. I think it's --
Hugo L. Black: But I tell you as what I'm thinking about.
Richard J. Maclaury: Yes.
Hugo L. Black: I think it may be a little plain. It's not so much how business institutionalizes itself or what names it give as I understand antitrust law was constructed for the purpose of providing that a company should not sell to one company cheaper than to sold its competitors. Now, suppose it's not the actual competitive, it is one in the line of business arrangement that have been set up which accomplish precisely the same in five years and would put Perkins out of business, suppose he did this?
Richard J. Maclaury: Well, first, let me answer it this way, going and I'll get to your specific question, going to the broader antitrust policy I do not believe that the broader antitrust policy under the Sherman Act would want to prohibit price discriminations in all situations. I think or rigidified by price but within that broad policy, certainly, I think it is a purpose of the Robinson-Patman Act and Section 2 of the Clayton Act to put competitors generally on the same pricing level. Yes, so that they can start off at an equal start and Congress in order to accommodate itself to the broader general, the broader view of the law that should have competitive pricing and bargaining on pricing restricted the reach of Robinson-Patman so that it declared a price difference, price differential, unlawful only where there was a lessening of competition that one of these three levels.
Hugo L. Black: Now suppose however, that there was a business who couldn't try much arranged, --
Richard J. Maclaury: Yes.
Hugo L. Black: -- where there was really no business difference between the levels and it were just simply the same as the company was selling right straight through without any levels, what about that?
Richard J. Maclaury: I have no problem with that at all Your Honor. I think that that would be a situation that would be a violation of Robinson-Patman Act.
Hugo L. Black: Well, that's what --
Richard J. Maclaury: And I think as I mentioned --
Hugo L. Black: Did you say that that was not shown?
Richard J. Maclaury: I say that that was not shown and that was not the situation here and in fact the evidence intended to show just the other way.
Byron R. White: Well, if the jury followed its instructions it wouldn't have found for the plaintiff on the basis that competition with Regal had been lessened, would it?
Richard J. Maclaury: I think it did, yes.
Byron R. White: Well, why? But it must have not called these instructions then?
Richard J. Maclaury: Well, the problem here Mr. Justice White was --
Byron R. White: Because there wasn't anything submitted to it on basis of control and if it followed the evidence there was a Standard, Signal, Western, Regal?
Richard J. Maclaury: Yes.
Byron R. White: And all the instructions to it said that was that they got as far as Western that stopped it.
Richard J. Maclaury: No, that is correct. But --
Byron R. White: Well, why if it called these instructions then the only way it could've reached the result it did was by going on the line of commerce?
Richard J. Maclaury: No, I don't think that the jury understood this problem. We had -- we have asked the Court at the trial level to submit to the jury the question whether the price differential as small as it was, was passed down to Regal. The Court refused to give that instruction. The Court instructed the jury contrary to our request that Perkins and Signal were competitors and I think what the jury did was to take that instruction assumed that Perkins was injured and assumed it was injured as a result of the price to Signal.
Byron R. White: So, you think that the jury decided to (Inaudible)?
Richard J. Maclaury: I think under that erroneous instruction it very well could have.
Byron R. White: Because of the companies would give it (Inaudible)?
Richard J. Maclaury: Which I say was non-existing and certainly wasn't proved. I see the --
Earl Warren: We'll recess now.
Richard J. Maclaury: We'll recess now.