Court Opinion

ID: 194665
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:22:21+00
Date Added: 2024-06-11T13:09:21.128883
License: Public Domain

April 6, 1993

               UNITED STATES COURT OF APPEALS
                   FOR THE FIRST CIRCUIT
                                        

No. 92-2301

            COASTAL FUELS OF PUERTO RICO, INC.,

                   Plaintiff, Appellant,

                             v.

          CARIBBEAN PETROLEUM CORPORATION, ET AL.,

                   Defendants, Appellees.

                                        

        APPEAL FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF PUERTO RICO

     [Hon. Juan M. Perez-Gimenez, U.S. District Judge.]
                                                     

                                        

                           Before

                    Breyer, Chief Judge,
                                       
               Selya and Cyr, Circuit Judges.
                                            

                                        

Michael  S.  Yauch  with whom  John  F.  Malley,  III,  McConnell,
                                                                 
Valdes, Kelly, Sifre, Griggs  & Ruiz-Suria and Neil O.  Bowman were on
                                                         
brief for Coastal Fuels of Puerto Rico, Inc.
Ruben T. Nigaglioni with whom  Jorge A. Antongiorgi,  and Ledesma,
                                                                 
Palou & Miranda were on brief for Caribbean Petroleum Corporation. 
          
Juan F. Doval  with whom Jorge R. Jimenez and Miguel Garcia Suarez
                                                                 
were  on brief for  Harbor Fuel Service,  Inc. and Caribbean  Fuel Oil
Trading, Inc.

                                        

                       April 6, 1993
                                        

                             1

          BREYER, Chief Judge.  Coastal Fuels of Puerto Rico
                             

buys marine fuel  oil in San  Juan and resells  that oil  to

ocean-going  liners at berth in San Juan Harbor.  It brought

this antitrust  action against its local  fuel oil supplier,

Caribbean Petroleum Corporation  ("CAPECO"), and two of  its

competitors,   both  of  whom   CAPECO  supplies.    Coastal

basically claims that ever  since October 1991, when Coastal

entered the  San Juan  market, CAPECO has  charged Coastal's

two competitors prices that are significantly lower than the

prices  it   charges  Coastal.     This   unjustified  price

difference, says Coastal, violates the  Robinson-Patman Act,

15 U.S.C.   13, and the Sherman Act, 15 U.S.C.   1.  Coastal

asked the  district court to enter  a preliminary injunction

"requiring CAPECO  to provide fuel  oil to Coastal  on terms

and conditions no less  favorable than those made available"

to Coastal's competitors.  The district court decided not to

enter the  injunction.   Coastal  appeals.   We  affirm  the

decision.

          In  deciding  whether   to  issue  a   preliminary

injunction, a district court  must ask whether the plaintiff

is likely  to succeed on  the merits, whether  the plaintiff

will otherwise suffer irreparable harm, whether the benefits

of an injunction will, on balance, outweigh the burdens, and

whether   an  injunction  is  consistent  with  the  "public

interest."  Planned Parenthood  League v. Bellotti, 641 F.2d
                                                  

1006, 1009 (1st Cir. 1981);  Boston Celtics Ltd. Partnership
                                                            

v. Shaw, 908  F.2d 1041, 1048 (1st  Cir. 1990).  This  court
       

will normally give the district court considerable leeway in

making  its decision, at least where,  as here, the decision

rests  upon an  exercise of  judgment and  a record  that is

incomplete.   Indeed, normally we will  reverse the district

court's decision  on such matters  only if we  are convinced

that it "abused its discretion" or committed a "clear error"

of fact or related  law.  See, e.g., Massachusetts  Ass'n of
                                                            

Older Americans  v. Sharp,  700 F.2d  749, 751-52  (1st Cir.
                         

1983).  We can find no such error in the present case.

          For one thing, Coastal's "likelihood of success on

the  merits,"  is, at  best, uncertain.    On the  one hand,

Coastal   presented   witnesses  who   testified   to  facts

indicating significant price differences.  They said that:

          (1) After Coastal entered the San Juan market, the
          resale prices charged  by its competitors  (to the
          ships) dropped by nearly $1 per barrel;

          (2) Coastal's competitors' resale prices  were at,
          or below, the prices CAPECO charged Coastal;

          (3)  Coastal,  though  it  had  expected  to  earn
          profits,  lost $1.3  million during its  first ten
          months of operations;

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                             3

          (4)  CAPECO (perhaps by mistake) once sent Coastal
          an  invoice showing  a price  of $1.45  per barrel
          less than the price CAPECO charged Coastal;
              

          (5) Two CAPECO  executives told Coastal executives
          that  CAPECO  was  charging Coastal's  competitors
          lower prices than CAPECO charged Coastal.

          On  the  other hand,  the  record  is not  at  all

specific about the prices charged.  Nowhere does  it contain

figures,  or even  estimates,  of the  actual prices  either

Coastal, or Coastal's competitors paid for fuel oil.  At the

same time, it contains other evidence that militates against

an eventual finding of unlawful behavior.  Cross-examination

of Coastal's witnesses revealed  that, when CAPECO officials

told  them  CAPECO charged  Coastal's competitors  less, the

officials  immediately  added  that  the  price  differences

reflected  "different contract"  terms.   The  evidence also
                                      

shows  that  CAPECO's   per  barrel  prices   diminished  as

customers ordered in  greater volumes --  a kind of  volume-

related pricing apparently commonplace  in the oil industry.

Coastal apparently  paid "spot sales" prices for oil, and it

may have bought  in somewhat lower  volumes.  The  Robinson-

Patman   Act   does   not   prohibit   volume-related  price

differences that  reflect genuine cost differences.   See 15
                                                         

U.S.C.    13(a); FTC  v. Morton  Salt Co., 334  U.S. 37,  48
                                         

(1948); Frederick  M. Rowe,  Price Discrimination Under  the
                                                            

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                             4

Robinson-Patman  Act, ch. 10 at 265-321 (1962).  Nor does it
                    

prohibit price  differences between spot sales and long-term

contract  sales that  reflect  different market  conditions.

See Texas Gulf  Sulphur Co. v. J.  R. Simplot Co., 418  F.2d
                                                 

793, 806-08 (9th  Cir. 1969); Rowe, supra,    4.2 at 50, ch.
                                         

11 at 322-29.

          It  may  well be  that,  at  trial, Coastal  would

produce more specific  price information, CAPECO  would fail

to  demonstrate  "cost  justification," and,  the  potential

cost,  or market,  related  differences  between "spot"  and

"contract" sales would evaporate. But, the opposite may also

prove true.  At this stage, a court could reasonably want to

see  more evidence  -- insisting that  the plaintiff  make a

somewhat  stronger,  more  specific,  showing  of  a  likely

violation of law, including a probability of overcoming what

the  evidence  now shows  as  plausible  defenses --  before

finding  a likelihood of  success on the  merits. See, e.g.,
                                                           

Atari  Games Corp.  v. Nintendo  of America, Inc.,  975 F.2d
                                                 

832, 837  (Fed. Cir. 1992) (plaintiff  must show "likelihood

that  it will overcome . . . defense"); New England Braiding
                                                            

Co.  v. A.W. Chesterton Co., 970 F.2d 878, 882-83 (Fed. Cir.
                           

1992) (same).  But cf. Dallas Cowboys Cheerleaders, Inc.  v.
                                                        

                            -5-
                             5

Scoreboard  Posters, Inc.,  600  F.2d 1184,  1188 (5th  Cir.
                        

1979).

          For another thing, the  district court did not err

in finding that Coastal  would not suffer "irreparable harm"

that a later damage award could not avoid.  On the one hand,

Coastal presented two witnesses  who testified to such harm.

These Coastal executives said, for example, that:

          (1) "[F]uel from CAPECO  is the only practical way
          to purchase fuel in the harbor."

          (2)  "[I]t's absolutely  imperative that  you have
          the  supply from  CAPECO  refinery  it's the  only
          locally produced product from San Juan harbor, and
          without that access on  equal basis to that supply
          you cannot compete in San Juan harbor."

          (3) "[W]e are sustaining  losses in here, . .  . I
          feel it's  damaging our trade mark,  and our brand
          and  our  reputation, and  I  don't  think we  can
          continue doing business like this." 

          (4) Withdrawal from  San Juan Harbor  "would serve
          irreparable damage upon Coastal's name  which goes
          back to 1915 in the form of serving [marine] . . .
          fuel in 20 other ports that we supply. . . ."

          On the other hand, cross-examination revealed that

Coastal is  a subsidiary of a large  firm (of the same name)

that sells marine  fuel in 20 other ports; that, on at least

three  occasions, Coastal  has imported  marine fuel  to San

Juan  (for resale)  from  its parent  company's refinery  in

Aruba;  that CAPECO  stored at  least some of  this imported

fuel oil for Coastal  in CAPECO's San Juan  facilities; that

                            -6-
                             6

Coastal also, on at  least one occasion, purchased  fuel oil

from  Sun Oil, apparently in Puerto Rico; and that Coastal's

witnesses (despite their assurances that importation was not

possible) were not familiar with the relevant prices.  

          Given  this  record,  we  cannot  second-guess the

district court's judgment that  Coastal had shown neither an

inability to  survive (during the course  of the litigation)

on imported oil, nor  a potential loss of "goodwill"  that a

later damage award could not readily compensate.  Appellants

presently point out  that the  courts possess  the power  to

issue  a business-preserving  injunction, at  least where  a

future damage  remedy may prove inadequate.   Compare, e.g.,
                                                          

Semmes Motors, Inc. v.  Ford Motor Co., 429 F.2d  1197, 1205
                                      

(2d Cir. 1970) (injunction  proper to prevent termination of

business) and Jacobson & Co. v. Armstrong Cork Co., 548 F.2d
                                                  

438,  444-45 (2d  Cir. 1977)  (injunction proper  to prevent

loss of customers) with Kenworth  of Boston, Inc. v.  Paccar
                                                            

Financial  Corp., 735 F.2d 622, 625 (1st Cir. 1984) (no real
                

threat of business closure)  and Goldie's Bookstore, Inc. v.
                                                         

Superior  Court of California,  739 F.2d 466,  472 (9th Cir.
                             

1984) (insufficient  evidence of "goodwill" loss).   But, we

also agree with the district court that plaintiff failed  to

                            -7-
                             7

demonstrate   the  existence  of  circumstances  that  would

require the exercise of that power in this case. 

          The upshot is a preliminary injunction record that

tends  to  show price  differences,  that  is unclear  about

amounts,   that  suggests   the  existence   of  significant

defenses, and that is not particularly convincing in respect

to  "irreparable   harm."    Were   "price  differences"  an

unmitigated  evil,  the case  for  a preliminary  injunction

would be stronger.  But, as we have previously stated, those

who wrote  the Robinson-Patman  Act had  pro-competitive (as
                                                        

well as  pro-competitor) objectives in mind.   See Monahan's
                                                            

Marine Inc. v. Boston  Whaler, Inc., 866 F.2d 525,  529 (1st
                                   

Cir.  1989).    And,  price  differences,  based  upon  cost

savings, will sometimes have  a pro-competitive impact.  Cf.
                                                            

id.  (recognizing  anti-competitive  dangers  of  forbidding
   

selective,  but  non-predatory,  price cutting).    Thus, we

understand  the  district  court's   hesitancy  to  issue  a

preliminary injunction, not only  without a stronger showing

of "irreparable  harm," but also without  knowing more about

the  facts of  the  case.   Its decision,  in  our view,  is

lawful.

          We add  two  further  points.    First,  Coastal's

complaint also asserts that CAPECO and Coastal's competitors

                            -8-
                             8

violated  the Sherman Act, 15 U.S.C.   1.  Coastal's request

for   a  preliminary  injunction,   however,  rested  almost

entirely upon its Robinson-Patman  Act claim.  And, Coastal,

on  this  appeal,  does not  contend  that  it  has made  an

evidentiary  showing  sufficient  to  warrant  a preliminary

injunction on the Sherman Act claim.  Cf.  Monahan's Marine,
                                                           

866 F.2d at 529  ("evidence of a violation of  the Robinson-

Patman  Act, showing  injury only  to competitors,  does not

automatically show a violation of the Sherman Act as well").

          Second, all three defendants (CAPECO and Coastal's

two  competitors)  asked  the   district  court  to  dismiss

Coastal's  Robinson-Patman  Act claims  on  the  ground that

Coastal could  not show  that  either a  high-price sale  to

Coastal, or a low-price sale to a competitor, took place "in

[interstate] commerce."  15 U.S.C.   13(a); Standard Oil Co.
                                                            

v.  FTC, 340 U.S. 231, 236-37 (1951); Mayer Paving & Asphalt
                                                            

Co. v. General Dynamics  Corp., 486 F.2d 763, 766  (7th Cir.
                              

1973), cert.  denied, 414 U.S. 1146 (1974); I Phillip Areeda
                    

&  Donald F.  Turner, Antitrust  Law,    233 at  248 (1978);
                                    

Rowe, supra,    4.9 at  79.   The district court  denied the
           

motion.  The defendant  competitors ask us now to  say that,

in doing so, the court was wrong.  

                            -9-
                             9

          We do not  reach the interstate  commerce question

in the context  of this appeal.   The legality of  the order

from which Coastal appeals --  the denial of the preliminary

injunction -- does not depend upon the "in commerce"  issue.

The parties that  wish to raise the  issue, the competitors,

are defendants; and, they have not filed a notice of appeal.

Fed. R. App. P. 3, 4.  And, in any event, the order of which

they complain, the refusal to grant their motion to dismiss,

is not an appealable order.  See Rodriguez v. Banco Central,
                                                           

790  F.2d  172,  177  (1st  Cir.   1986)  (criteria  for  an

appealable collateral order).

          For  these reasons, the  decision of  the district

court is

          Affirmed.
                  

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