Document: 496 U.S. 543 110 S.Ct. 2535 L.Ed.2d 492 TEXACO INC., Petitionerv.Ricky HASBROUCK, dba Rick's Texaco, et al. No. 87-2048. Argued Dec. 5, 1989. Decided June 14, 1990. Syllabus Between 1972 and 1981, petitioner Texaco sold gasoline at its retail tank wagon prices to respondent independent retailers but granted substantial discounts distributors Gull Dompier. resold the gas under own name; fact that it was being supplied by unknown respondents. Dompier paid a higher price than brand name stations. With encouragement of entered market directly. Both picked up plant delivered directly their outlets, neither maintained any significant storage facilities. Unlike Gull, received an additional discount from for deliveries. executives were well aware Dompier's dramatic growth attributed magnitude discounts. During relevant period, stations increased sales volume dramatically, while respondents' suffered corresponding decline. In 1976, respondents filed suit against Robinson-Patman Act amendment Clayton (Act), alleging distributor violated § 2(a) Act, which, among other things, forbids person "discriminate in price" between different purchasers commodities, where effect such discrimination is substantially "injure . competition with who either grants or knowingly receives benefit discrimination, customers them." The jury awarded actual damages. District Court denied Texaco's motion judgment notwithstanding verdict. had claimed that, as matter law, "functional discounts" i.e., are given purchaser based on role supplier's distributive system reflect, least generalized sense, services performed supplier—did not adversely affect within meaning Act. rejected argument, reasoning "presumed legality functional been rebutted evidence amount Gull's reasonably related cost function they performed. Appeals affirmed. Held: 1. Respondents have satisfied burden proving Pp. 554-571. (a) argument did charging light this Court's holding FTC v. Anheuser-Busch, Inc., 363 536, 549, 80 1267, 1274-75, 4 1385 "a [§ ] merely difference." which would create blanket exemption all discounts, has some support legislative history foreclosed text itself, plainly reveals concern competitive consequences levels distribution carefully defines two specific affirmative defenses unavailable. 556-559. (b) Also extent acted wholesalers, differentials competition" It true legitimate constitutes reasonable reimbursement purchasers' marketing functions does violate Thus, raises no inference injury Morton Salt Co., 334 37, 46-47, 68 822, 828-29, 92 L.Ed. 1196. However, tolerate completely untethered savings wholesaler's costs. This conclusion consistent Federal Trade Commission (FTC) practice, Perkins Standard Oil Co. Cal., 395 642, 89 1871, 23 599, analysis antitrust commentators. record here adequately supports finding There extraordinary absence connect enjoyed Texaco. full purchases even though most consumers, extra margin those obviously enabled them aggressively both wholesale marketing. presumption adverse becomes more appropriate competed market. Furthermore, indicates encouraging integrate downward fully informed about impact same time inhibiting upward integration 2544-2551. 2. merit contention damages award must be judged excessive law. theory improperly blurs distinction liability issues. doubt proof continuing violation throughout 9-year period sufficient. Proof necessarily less precise, expert testimony provided sufficient basis acceptable estimate Cf., e.g., J. Truett Payne Chrysler Motors Corp., 451 557, 565-566, 101 1923, 1929, 442. 571-573. 842 F.2d 1034 (CA9 1987), STEVENS, J., opinion Court, REHNQUIST, C.J., BRENNAN, MARSHALL, BLACKMUN, O'CONNOR, JJ., joined. WHITE, concurring result, post, p. 573. SCALIA, judgment, KENNEDY, joined, 576. Peter M. Fishbein, New York City, petitioner. Michael R. Dreeben, Washington, D.C., United States amici curiae, supporting petitioner, special leave Court. Robert H. Whaley, Spokane, Wash., respondent. Justice STEVENS 1 Petitioner (Texaco) several (RTW) distributors. action 38 Stat. 730, amended, 49 1526, 15 U.S.C. 13, 13(a). recovered treble damages, Ninth Circuit affirmed (1988). We certiorari, 490 1105, 109 3154, 104 1018 (1989), consider do because seller responsible customers' resale pricing decisions. While we agree basic thrust conclude case facts record. 2 * Given jury's general verdict favor respondents, disputed questions resolved favor. seems, moreover, serious character market, practices, relative importance direct ("throughput" business) principal disputes trial causation 3 12 retailers. They displayed trademark, accepted credit cards, bought products Spokane highly ran 1981. Stations nationally advertised major brands featuring brands. Moreover, although discounted nearby station obvious respondent's trade, cross-city traffic patterns relatively small size produced citywide See, App. 244, 283-291. throughput declined monthly 569,269 gallons 1970 389,557 1975. Id., 487-488. retailers' share 76% 49%.1 Ibid. Seven out business end 1978. 22-23, Record 501. 5 tried unsuccessfully increase ability compete lower priced Some converting service self-service 55-56. Two sought buy trucks haul supply point, vetoed proposal. 38-41, 59. 6 struggled, prospered. Company (Gull) headquarters Seattle distributed petroleum four Western name. 94-95. purchased ranged 6¢ 4¢ below RTW price. 31-32. product known public id., 256. stations; "consignment stations" "commission stations." situations retained title until pumped into motorist's tank. consignment stations, operator set prices, commission commission. Its policy penny prevailing employed truckdrivers bulk also one supervisor Spokane. Apart investment facilities, apparently owned assets 96-109, 504-512. At respect fairly characterized retailer period. 7 (Dompier) started 1954 selling Quaker State Motor Oil. 1960 became line products, mid-1970's represented over three-quarters business. 114-115. 3.95¢ 3.65¢ thus Dompier, unlike names. 24, 29-30. 8 10 prior October 1974, president others wereinde pendently operated. 119-121, 147-148. early 1970's, representatives encouraged enter directly, 1974 1975 acquired stations.2 114-135, 483-503. estimated total made during middle 1970's "[p]robably 84 90 percent." 115. Like outlets. facility, seldom used capacity many Again equivalent common carrier rate delivering addition price, profit hauling function.3 123-131, 186-192, 411-413. 9 regularly respondents'. Even before consumers barely above 329-338; 315, 1250-1251. continuously 155,152 462,956 gallons; 20.7% almost 50% ample believed attributable "the allowance."4 See also, 213-223, 407-413. response complaints individual aggressive pricing, however, professed "couldn't understand it." 401-404. II 11 July 1976. After 4-week trial, measured difference As subsequently decided 442 (1981), measure improper. Accordingly, issue liability,5 remanded new trial. Hasbrouck 663 930 cert. denied, 459 828, 103 63, 74 65 (1982). second contended justified savings,6 good-faith attempt meet competition,7 lawful discounts." withheld justification defense supported defenses. $449,900.8 credited witness what profits if 634 F.Supp. 34, 43 (E.D.Wash.1985); F.2d, 1043-1044. 13 verdict, law decisions independently motion. supplementing oral ruling denying directed assumed, arguendo, entitled discount, retail,9 nevertheless concluded performed.10 F.Supp., 37-38, n. 4. 14 reasoned: "As Supreme long ago clear, recently reaffirmed, there may favored disfavored buyers compete, so buyer customers. Salt, 43-44 [68 826-827]; 646-47 [89 1873-74, 599] (1969); Falls City Indus., Inc. Vanco Beverages, 460 428, 434-35 [103 1282, 1288-89, 75 174] (1983). Despite capacities Hasbrouck, section occur (1) cost-based (2) portion passed theirs Hasbrouck. S.Ct., Oil, 648-49 1874-75]; see E. Kintner & Bauer, supra, 22.14. "Hasbrouck presented demonstrate insubstantial justify discount." 1039. 16 observing: 17 "To hold wholesaler could never immune scrutiny discriminatory procedure can effectively serve harm competition. think result contrary objectives Act." 1040 (emphasis original). III 18 begin our consideration legal status discounts11 examining language Section provides part: "It shall unlawful engaged commerce, course indirectly, discriminate commodities like grade quality, involved use, consumption, Territory thereof Columbia insular possession place jurisdiction States, lessen tend monopoly injure, destroy, prevent them. ." 19 contains express reference discounts.12 contain provide protection categories discounts—those seller's manufacture, delivery, sale,13 represent equally low competitor. FTC, 340 231, 250, 71 240, 95 239 (1951). comes us, available 20 order establish facts: interstate commerce; quality respondents; (3) discriminated hand other; (4) prohibited each recover he his injuries. Payne, U.S., 562, 1927. 21 first elements Court,14 challenging sufficiency argue, charged injure arguments separately. IV 22 Indeed, carried logical conclusion, exempt except competing purchasers. primary following comment Congressman Utterback, active sponsor Act: "In simple English, mere difference. Underlying word idea relationship exists parties entitles equal treatment, whereby casts disadvantage upon other. If goods concerned, exists. Where, involve sacrifice part necessary costs applied business, leaves deficit inevitably customers; there, too, exist base charge discrimination. But exists, markets conditions affecting them, sale constitute bill." Cong.Rec. 9416 (1936). 24 previously considered excerpt refused draw proposes. 547-551, 1273-1276, (1960). Although remain persuaded itself. context statute distribution, defenses, anomalous assume Congress intended term "discriminate" limited meaning. Anheuser-Busch identical claim differential injured competitors—a called "primary line" claim.15 reasons gave decision apply well. quoting Utterback's statement full, wrote: 25 "The trouble irrelevant proceeding, misdirected when solely whether convinced whatever said rest §§ 2(b)—and say nothing here—there overtones buccaneering phrase 'discriminate price.' Rather, provision 1274. 26 noting view precedents, added: 27 "[T]he itself spells make illegal legal, derange integrated statutory scheme read means nondirective phrase, Not only conceive statute, but, perhaps this, thoroughly undesirable. commentator succinctly put it, 'Inevitably every controversy shift detailed governing provisions—"injury," justification, "meeting competition," etc.—over "discrimination" concept ad hoc resolution divorced specifically pertinent text.' Rowe, Price Differentials Product Differentiation: Issues Under 66 Yale L.J. 1, 38." 550-551, 1275. 28 Since already "is difference," reject argument. V 29 828-829, 1196 (1948), held inferred pay supplier "substantially competitors pay." Industries, Beverage, 435-436, 1288-1289, 174 curiae (the Government), argues should differences wholesalers argue inconsistent fundamental policies construe requiring control prices. liable Government correctly notes, Brief Amici Curiae 21-22 (filed Aug. 3, 1989), endorses position advocated 35 years Report Attorney General's National Committee Study Antitrust Laws (1955). 30 observing suppliers ought buyers,16 without might go uncompensated performed,17 31 recommends, therefore, granting single-function tactics. cutting level fact, 'the of' accords due recognition functions. customer type results operate per unit. illegality usual tests. event, consequent lack concern. 32 "On hand, subterfuge. For instance, wholesaler-retailer buys wholesaler, all. Only actually performs certain functions, assuming risk, investment, involved, legally qualify discount. Hence eligible 208. 33 generally description A need satisfy rigorous requirements prove particular accordingly cause lessening customers.18 case, 34 hypothetical predicate Committee's entire discussion "that functions." Such illegal. viewing favorable indicating constituted value 1039; 38. separately compensated function, nor contends cannot departing "from established precedent, practicality, Congressional intent." 14.19 assumes gratuitous somehow novel practice. That assumption flawed. 36 observed, "due reimbursement" endorsed study countenance longstanding principle safe harbor likewise evident practice Commission, has, permitting proceeded appeared subterfuges avoid Act's restrictions. re Sherwin Williams F.T.C. 25, 70-71 (1943) (finding paint manufacturers dealer-distributors consumer through departments branch stores wholly them"); Ruberoid 46 379, 386, ¶ (1950) (liability designations always indicate accurately purchasers"), aff'd, 189 893 (CA2 1951), rev'd rehearing, 191 294, 343 470, 72 800, 96 1081 (1952).20 Doubleday 52 169, 209 (1955) ("[T]he risks compensating expenses assumed buyer"); General Foods 798, 824-825 (1956) ("A forbidden sell classes orders issued class another, commerce contemplated result," "[t]o rendering ipso facto [creates] separate classification 2(d) Act"); Boise Cascade 107 76, 212, 214-215 (1986) (regardless buyer's costs, recognized usually other, risk secondary Act"), grounds, 267 U.S.App.D.C. 124, 837 1127 (1988).21 Cf. FLM Collision Parts, Ford 1019, 1027 1976) ("We suggest imply manufacturer allowance (whether labelled 'incentive'), purpose defeating 2(a)'s construed defeat it"); C. Edwards, Discrimination Law 286-348 (1959) (analyzing cases).22 37 Most these cases questionable offered "complex types distributors" whose "functions scrambled." F.T.C., predictable: Manufacturers will likely able effectuate tertiary vertically integrated. Nevertheless, tendency preclude possibility pursue strategy despite discrete mechanism allocating discrepancy recipients.23 far constituting pattern reflects conduct similar rise 599 (1969). Standard, retailer. He asserted damaged violations Standard: First, Perkins; and, second, another distributor, Signal, Hyway, turn Regal, Perkins.24 question Act—which refers discriminators, purchasers, customers—covered injuries 646-647, 1873-1874. limitation excluding "fourth level" "wholly artificial one." 647, 1874. reasoned "Perkins' point view, done him certainly presence link chain producer retailer."25 justly case. insulate otherwise Act.26 39 Nor reader commentary much surprised today's result. Commentators disagreed presumptively allowable exceptional nominally unjustifiable entirely coverage Act.27 Others, Frederick legitimacy sweeping terms,28 Rowe concedes existence "exception rule." 174, 7; 195-205.29 40 commentators' analysis, Commission's renders implausible involves departure understandings. Perhaps rests squarely intent pass advantage intermediary. difference, hardly cuts shows scrambled frequently signaled illegitimacy alleged permissible consumers. To appropriate. Their tending rebut sales. 41 indicates, affirmatively expand persistent marketwide policies. allowance. Yet downward, supplying generous useful integration, respondents: permission fuel using wagons, refused. peculiarly difficult 42 component purchaser; encompasses customers." 436, 1289. compelled language, persons grant receive "customers indirect effects surely presumed automatically setting, indeed, expect least, When legitimate, simply arise. legitimacy, sometimes possible produce showing caused sort prohibits. anticompetitive proved—as believe case—they covered Act.30 VI introduced describing diversion Respondents' focused trade Dompier-supplied analyzed 1981 included (although found controlled Red Carpet outset period). testified know basing extrapolation data applicable therefore 44 accept period; well, affected market; precise. retailers, plaintiff Act; rather, "make something laws designed prevent. 648, 1874-75, (1969) (plaintiff 'must, course, show causal connection suffered')." time, reaffirmed "traditional rule excusing plaintiffs unduly standard injury." 565, 1929. Zenith Radio Corp. Hazeltine Research, 100, 123-124, 1562, 1576-1577, 129 Bigelow RKO Pictures, 327 251, 264-265, 574, 579-580, 652 (1946).31 noted, object instructions issue. flaw calculation 45 ordered. 47 48 submission urging ground stated 550, 1275, (1960), "statute scheme" providing contained statute. next opinion, declares trigger competition, announces "[s]uch illegal." Ante, 562. "may indication construed. relies heavily suggests permits "legitimate subterfuges. 563. call foreclosed, offers prove, sells pays undersell plaintiff's fail. kind retailer's 13(a), reaches distributor's explains why justifies provisions suggesting decision, causes injury, latter makes legitimated implied. poses open construction. 50 noted difficulty. construction (FTC Commission) then espousing applying, 173 210 (CA7 1949), (1951), said, "[a] according middleman encounters risks." Committee, 206. clearly differed authoritative accommodate broader purposes policy." later stage disavowed eliminate sellers practices wholesalers. reversal position, Seventh affirmed, explained "broader policies." Reply O.T.1957, 32. appears amicus us recognize define brief, spell considers defensible. cite since filing reply brief 1957 purported describe contours pricing. FTC's persuade recommends remand, affirms judgment. 51 congressional attention involving policy, I late date right, require is. now recognizes reflect proper factors subterfuges, await FTC. reviewing explanation private rules seller-discounter definition extended recognizes, stop there. Hence, concur 53 whom KENNEDY joins, 54 none pressed removing persuasive. cannot, adopt reasoning, seems "reasonable" provides: 55 them: Provided, herein sale, delivery resulting differing methods quantities delivered." 56 ante, 556, three met: discriminates victim beneficiaries customers, based. arguments, conditions. concludes, so. prohibits True, reverse situation here. factor bear occurred, address next. 57 Second, giving unavailable Hasbrouck's Any asserts, unpersuasive. "to [that person]." 13(a) added). Obviously, "competition customers" occurs beneficiary's choice own. implied "proximate cause" requirement cut off reason voluntary act passing implausible. field laden "voluntary acts" third relieve violator beginning ultimate purchaser, last "voluntarily" choosing possible. focuses free will, predictable commercial motivation; just ordinarily (and profits) advantage, "with beneficiary mind damage rare exception rather universal rule. rightly rejects interpretation. independence pass-on beside point. 58 Petitioner's relates condition (i.e., discrimination), assert present joined length petitioner's shown exempted, discount" efficient based, impossible short answer addressed Congress. 59 not, response, accepts somewhat modified form. says, "reasonable [petitioner] 562; 570. Relying mass extratextual materials, concludes "rigorous defense." 561. find quite puzzling. straightforward: prohibited, unless immunized "cost justification" defense, "make[s] [the] requirement. am loss meets penny, course: defense" refers, 561, rigors mathematical precision, saving close enough 561-562, 18. How determine (through normally, alas, "rigorous" means) test? Shall use nationwide average? 60 suppose (in sense unlikely subvert Act) commensurate saved (as requires), incurred performing supplier. proscribed on. "reasonableness" basis, applies ("value [the supplier] distributor's] functions," 562), functions"—which thing. unable justified. 61 my mind, plausible proposition —cost not—negates probability destroying element prima facie 434, 1288, (1983): really functionally divided, wholesalers—because on, purchase instead Or, differently, divided opportunity obtaining alone Therefore goes), division established, complaining (e.g., agreement former's retailer-customers) prevents normal operating. 571, 30, raised below, calls forth number issues briefing factual development. decide instance. 62 foregoing reasons, includes operated action. dealers 1970, 22, "Q. Did you conversations to—Dompier change emphasis move business? A. Yes, did. Would tell that? [A.] Well, various times Seventies went supplying; words, try And 1974—we '74 '75 began operating company operations salaried employees." 116-117. rate—that hired you, it? That's right. understand—to your understanding built-in-profit? sure does. product? Yes." 126. obligation comply federal regulations periods shortage. communications Government, vice wrote, "We allowance." 413. argued mandated "in commerce" "That 2(b) "Provided, rebutting prima-facie furnishing facilities good faith competitor, furnished competitor." 13(b). differed. awards average $5,486.59 year "While 'functional discount' retail, compare Mueller 120 (1962), 323 (7th Cir.1963), 377 923 [84 1219, 215] (1964) (entitlement level) 169 purchase), court assumes, retailed discount.' " (E.D.Wash.1985) "Secondly, negatively were, part, reflected (or customers') consumed absorbed buyers; portion) circumstances, innocuous nature rebutted, universally remains acts compensation buyer. 309-10 (1983); Rill, Availability Functional Discounts Justifying Discriminatory Pricing, 929, 939-41 (1985). 'be [favored] buyer' 'should exceed buyer] .' Company, 209, cited Docket 9133, slip op. 117 (Feb. 1984) (initial decision). exceeds particularly where, here, excess negative quantitatively precise accounting mandated, identifying justified." (footnote omitted). discount," adequate discussion: "A system, reflecting, supplier." 1989). earlier drafts include proviso. Shniderman, Tyranny Labels"—A Harv.L.Rev. 583-586, nn. 40-57 (1947). deletion ambiguous significance. be, suggested, circumstances passage "must conveyed realization judiciary occurred narrowing gates plan come law." 588. way detracts blunt direction text, expose discriminator liability, regardless attempts characterize 6, supra. contested branded unbranded quality. Borden 383 637, 645-646, 86 1092, 1097-1098, 153 (1966) (" '[T]he economic inherent names national advertising jurisdictional inquiry "like quality" test' "). proved distinguish probable [price] (primary-line injury), (second-line (third-line injury)." 20.9, 127 imposing dual responsibility contradicts Resale-price fixing incompatible tenets economy. What more, arrangements policing, detecting, reporting cutters apart resale-price arrangements, conscious adherence quotations feasible operation, 206-207 (footnotes relate purchaser's activities buying thwarts efficiency compels distributors, hence serves penalty integration. businessman fulfills relieving storage, transportation, administration, etc., performance, capital suppliers, unaffected retailing disqualifying recognizing wholesaling render charge." 207. theory, defend invoking supplier, interposing "has proven difficult, expensive, often unsuccessful." 23.19, pp. 366-367 "seller reductions savings," 23.10, 345, exactitude ill suited precisely measured, factors. Calvani, B.C. Ind. Comm.L.Rev. 543, 546, (1976) (distinguishing differences); Laws, 171 largely illusory practice"). Discounters claims negating substantiality notion reasonableness pass-through latitude defense. Harv.L.Rev., 603-604 (substantiality cases). ourselves that: "Conceived vehicle allowing reward efficiencies level, narrowly defined derived method buyers. violating whereas enforcement agency negates violation." 935 (1985) continues summoning parade horribles march believes case: According Appeals' "would multiply rigidify encourage maintenance Sherman ., jeopardize businesses wholesalers." 14. Whiting, 312, 316, (1938) (functional overlap); 263 (1945), 210, 217 1949) ("The knows intends wholesaler's] retailers"), remand dropped prohibiting 309 (1959). pre-remand subject harsh criticism. Much, all, criticism ruling, "supplier middlemen's tactics, lest undercut detriment purchasing Alternatively, forego operational freedom matching theirs." Nothing today condone approve 120, 127-128 (1962) (refusing "add 2(b)"), 1963), 923, 215 (1964). expressly dicta se propounded Foods, 127-128. merits resolve us. do, dictum "should 209. demand associated Government's contradict decision. behalf criticizes costs," imposed "liability downstream 138-140, 1127, 1141-1143 (1988) (summarizing debate relevance discounts). indeed rules, departed perceptibly mainstream reading interpretation correct, affirm entail principles criticized Government. opposed petition certiorari "we presents broad discusses based)." Amicus May 16, willing indicated Service Station Dealers America (SSDA), organization representing jobbers sellers. SSDA 1-2. force franchisees circumvent restrictions termination franchise agreements. 324-332, 2801-2806. One that—absent making engage discrimination—excessive rare. observes, "[t]his behavior 17, 1989) ("[M]arket forces discourage offering allow customers"). Much Perkins' parallels "There Signal Perkins, Regal thereby gasoline. Furthermore repeatedly complained officials down danger destroyed Standard's practices. sustain 649, 1875. "Here harmed competitively Signal's competitor Regal. These give recoverable —that discriminators sanctions expedient adding chain," 1874—seems capable standing narrower proposition, exercised majority intermediary, retailer, 651, 1876 (MARSHALL, dissenting part), dissent pointed out, ibid., limits declared. Celnicker Seaman, Discounts, Economic 1989 Utah L.Rev. 813, 857 (1989) (concluding "[t]rade manifestations violates criteria devices protect L.J., 940-941 ("Although courts insist earn equivalency sense"); 318-320, 305 (1983) ("Functional deemed lawful," cases, "arising unusual circumstances," "discrimination injury); B.C.Ind. Com.L.Rev., (discounts qualifications, "[p]erhaps important caveat resellers discount"); 312-313 ("It surprising injurious corrective gap successive distribution"); Kelley, Calif.L.Rev. 526, 556 (1952) "characterization cloak immunity prohibitions 599-600 (Commission's approach influenced subtle discriminating techniques employment receiving differentials"). Professor others, describes clear dissatisfaction. complains "[t]he failure cope problem left job case." Law, 313. adds "occasional proceedings" "Commission's wrong-headedness." 312. Edwards' observations prosecutorial discretion inquiry. scholarly commentators, duty faithful interpreting statutes whether, how, rewritten. quote classes—so (nearer supplier) ladder further consumer)." F. omitted) (hereinafter Rowe); 178. writing exception, identifies "of dubious validity today." 196. Rowe's flawed implications follow logic complaint, exposes fails monitor wholesaler. 204. defect argument: Legitimate insulated 203-204. draws raise, address, negated quoted approval passage: "[D]amage rarely susceptible concrete, contexts. proof, factfinder 'conclude defendants' wrongful plaintiffs' decline values, causes, plaintiffs.' [327 U.S.], 264 [66 579]. Eastman Kodak Southern Photo Materials 273 359, 377-379, 400, 404-405, 684 (1927); Story Parchment Paterson Paper 282 555, 561-566 [51 248, 250-252, 544] (1931)." 1576-1577.

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