Opinion ID: 543660
Heading Depth: 3
Heading Rank: 1

Heading: Pre-Container contacts

Text: 64 The appellants assert that, prior to the Supreme Court's decision in Container, the appellees all regularly provided one another with information concerning dealer tankwagons and discounts. The record contains evidence indicating that the appellees did in fact engage in direct communication concerning price levels and dealer support. For example, Agnar Nerheim, a marketing official with Standard Oil, testified that between 1956 and 1958 he telephoned competitors to determine what retail price level they were supporting in the market, and that he sometimes asked what was the specific amount of dealer assistance being given. He also testified that he received similar calls from competitors. When asked about which specific companies were involved, Nerheim testified that he had such conversations with individuals from Union, Richfield (now ARCO), Texaco, General (now Mobil) and Shell. 65 Nerheim testified that such price verifications continued after he was transfered to Standard's Los Angeles office. Nerheim stated that he was transfered to Los Angeles because most of the major oil companies were headquartered there, and it would therefore be easier for him to contact competitors. In addition to verifying prices, Nerheim stated that he also spoke with competitors in order to obtain market intelligence, including information concerning wholesale and retail matters. Among the subjects discussed were the price wars that were taking place in Los Angeles. Nerheim testified that, during this time period, he had discussions concerning such market intelligence with officers from ARCO, Humble (now Exxon), Texaco, Mobil, and Gulf. Most of these contacts were face-to-face visits rather than phone calls. Nerheim stated that he kept no records of these competitor contacts, and that he had been specifically instructed by his superior not to put down on his expense reports the names of any competitors whom he took to lunch. Nerheim stated that such contacts continued until 1967. 66 Moreover, Robert Erhard, an official with the Carter Oil Company (later acquired by Humble, now Exxon) testified that, sometime between 1959 and 1961, Agnar Nerheim came to his office in Seattle and explained to him how they could converse about pricing without there being any telephone record. According to Erhard, Nerheim explained that the local Standard office in Seattle could reach him on a company WATS line, and that calls could therefore be made through the local office without appearing on company long-distance records. In light of Erhard's and Nerheim's testimony, it seems clear that the record supports an inference that Nerheim engaged in secret conversations with competitors concerning price levels during the 1960s. Other testimony indicates that other Standard employees engaged in similar conversations with competitors during this time period. 67 The appellees do not appear to contest the appellants' suggestion that such contacts took place prior to the decision in Container. Instead, they raise two arguments as to why the evidence should not be considered as supporting an inference of conspiracy. The appellees first argue that the testimony is ancient and is too stale to have any probative value. For several reasons, we must reject this contention. First, although all of this pre-Container evidence falls outside the limitations period applicable in this case, the district court dismissed this action without ruling on the plaintiffs' claim that the statute of limitations had been equitably tolled by the defendants' alleged fraudulent concealment of their activities. If the statute was tolled, then we would have little difficulty concluding that the appellants' evidence of secret direct price exchanges among the appellees supports an inference of an agreement to fix or stabilize prices. Accordingly, on remand the district court should consider whether the statute of limitations has been tolled; if it has, then the plaintiffs may use this evidence of competitor contacts in order to establish the existence of a conspiracy during the pre-Container period. 68 Second, we think that the pre-Container evidence is relevant to establishing the appellees' intent and motive in publicizing, through press releases and posting, their dealer tankwagons, dealer discounts, and supported retail prices. The appellants have produced evidence indicating that these methods of publication were generally meant to serve the same purposes as the direct competitor contacts that had preceded Container, and, indeed, that they were used as a substitute for such contacts in the post-Container period. Thus, for example, Nerheim testified that, by 1967 (two years before Container ) Standard had largely abandoned the practice of verifying its prices directly to its competitors, relying instead on its system of posting such information publicly, a practice which it had begun earlier in the decade. Nerheim stated that, before he left Los Angeles in 1967, such information was publicly posted, and competitors therefore no longer needed to verify prices with him verbally; they would just check the listings and then drop by his office to say hello. Occasionally during this period, however, Nerheim still responded to phone calls requesting information on specific wholesale dealer allowances. 69 Similarly, C.R. Jones, an official with Mobil, testified that Mobil used several different methods to obtain information from competitors concerning dealer aid, but that the use of direct horizontal communications was dropped after the decision in Container was announced. Thereafter, Mobil relied largely on trade publications, contacts with competitive service station dealers, and checking postings in order to obtain information concerning competitors' levels of dealer aid. Although various Mobil bulk plants had been posting in various degrees for some time, after Container Mobil instituted a uniform practice of posting at all of its plants across the United States. As noted earlier, this uniform system of posting included publicizing Mobil's tankwagons and dealer discounts for specific trade zones. Mr. Jones specifically testified that this shift in methods did not represent a change in overall business practices: 70 ... The decisions in the Container case changed our communications. But we did not intend that it change any business procedures or practices that we had historically been operating under, that we felt were not necessary to change. We were attempting to maintain our conduct on a--in a legal manner, and certainly not attempting to say we have to change our way of life because of a decision in a court case. 71 We think that this evidence concerning the shift to indirect methods of informing competitors of wholesale price levels provides some support for the appellants' claim that the post-Container price publications were made pursuant to a common understanding or agreement. The pre-Container activities, which involved verifications of dealer support levels upon personal request, fit squarely within the scope of Container. The appellants' evidence suggesting that the appellees shifted methods of communication, without abandoning the goal of giving and receiving such information, supports an inference that the public dissemination of dealer support information was undertaken pursuant to a mutual understanding. 16 72 The appellees also claim that the legality of their pre-Container conduct was upheld in Hanson v. Shell Oil Co., 541 F.2d 1352, 1359-60 (9th Cir.1976), cert. denied, 429 U.S. 1074, 97 S.Ct. 813, 50 L.Ed.2d 792 (1977), and Gray v. Shell Oil Co., 469 F.2d 742, 746-47 (9th Cir.1972), cert. denied, 412 U.S. 943, 93 S.Ct. 2773, 37 L.Ed.2d 403 (1973). We disagree. First, we note that both of those cases arose under different procedural postures than the present case, and they involved different standards of review. Hanson was an appeal from a jury verdict for the defendants after a second trial. The plaintiffs contended that the granting of a new trial after the first jury had ruled in their favor was an abuse of discretion. Hanson, 541 F.2d at 1359. After reviewing the record, we held that the trial court did not abuse its discretion in concluding that the first jury's verdict was against the weight of the evidence. Id. at 1359-60. In Gray, the jury had rendered a verdict for the defendant, Shell Oil Co.; we therefore noted that, on appeal, we were required to view the evidence in the light most favorable to Shell. Gray, 469 F.2d at 746. Our standard of review in the present case is, of course, very different from that applied in Hanson or Gray. Here, the appellants contest the entry of summary judgment against them. We review the district court's decision de novo, and, within the limits established by Matsushita, we view the evidence in the light most favorable to the appellants. See Matsushita, 475 U.S. at 587-88, 106 S.Ct. at 1356 (noting that, within the limits imposed by antitrust law, [o]n summary judgment the inferences to be drawn from the underlying facts ... must be viewed in the light most favorable to the party opposing the motion) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)). 73 Furthermore, as the appellants correctly note, the claims in Hanson and Gray were quite the opposite of those alleged in this case. As required by Container, in both Hanson and Gray we undertook a highly fact-specific inquiry. In neither case did we broadly endorse competitor contacts for the purpose of price verification. The plaintiffs in Hanson and Gray sought to establish that the defendants had conspired to create price wars in order to drive independent marketers out of business. Hanson, 541 F.2d at 1355; Gray, 469 F.2d at 746. We noted that the exchange of wholesale price information was initiated by dealers in Gray and by the companies in Hanson in order to benefit dealers facing severe competition, and we concluded that on the specific facts of those two cases [s]uch exchange of information does not rise to the level of an illegal conspiracy. Hanson, 541 F.2d at 1360; Gray, 469 F.2d at 747. 74 By contrast, the evidence in the present case amply supports an inference that the exchange of price information by the appellees was done with the purpose and effect of allowing greater coordination and stabilization of prices. Thus, while in Hanson we distinguished Container, noting that [t]he goal of either company was not shown to be price stabilization.... 541 F.2d at 1360; see also Gray, 469 F.2d at 746-47 (Here, as distinguished from Container, the price inquiries were initiated [by the dealers] and the information was sought, not for the direct benefit of Shell, but for the benefit of the dealers.... This is a far cry from Container, where the price information was sought solely for the benefit of the manufacturers....), exactly the opposite is true in this case. 75 In sum, we conclude that the evidence concerning the appellees' pre-Container activities is sufficient, when considered together with the evidence concerning pricing patterns, to support an inference of an agreement to stabilize prices. If anything, the pre-Container contacts are stronger evidence of conspiracy than the price dissemination practices discussed above in Section III-B. Accordingly, on remand the district court must consider whether the statute of limitations has been equitably tolled. Furthermore, even if the statute has not been tolled, we think that the pre-Container evidence is nonetheless relevant in helping to establish the appellees' intent and purpose in disseminating, during the post-Container period, information concerning dealer tankwagons and levels of dealer support and assistance. 76 Finally, as with the price dissemination practices, permitting an inference of conspiracy from direct competitor contacts will not have significant anticompetitive effects. Appellees have alleged no pro-competitive rationale for their behavior that easily could not be achieved through other means. See discussion in III-B-1 and III-B-2 supra. Moreover, given that appellees have largely abandoned the practice already there is no reason to believe that allowing the inference now will have any significant economic impact. Thus, we find that the inference of a conspiracy to stabilize prices is permissible under Matsushita.