Court Opinion

ID: 2971024
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:27:11.032425+00
Date Added: 2024-06-11T11:43:33.096107
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                Pursuant to Sixth Circuit Rule 206                        2    Tom-Lin Enterprises, et al.                 No. 01-4326
        ELECTRONIC CITATION: 2003 FED App. 0399P (6th Cir.)                    v. Sunoco, Inc.
                    File Name: 03a0399p.06
                                                                                              _________________
UNITED STATES COURT OF APPEALS                                                                     COUNSEL
                  FOR THE SIXTH CIRCUIT                                   ARGUED: Brian K. Murphy, MURRAY, MURPHY,
                    _________________                                     MOUL & BASIL, Columbus, Ohio, for Appellants. A.
                                                                          Christopher Young, PEPPER, HAMILTON, Philadelphia,
 TOM -LIN ENTERPRISES, INC.,         X                                    Pennsylvania, for Appellee. ON BRIEF: Brian K. Murphy,
 et al.,                              -                                   MURRAY, MURPHY, MOUL & BASIL, Columbus, Ohio,
            Plaintiffs-Appellants, -                                      for Appellants.      A. Christopher Young, PEPPER,
                                      -  No. 01-4326                      HAMILTON, Philadelphia, Pennsylvania, Sandra J.
                                      -                                   Anderson, VORYS, SATER, SEYMOUR & PEASE,
              v.                       >                                  Columbus, Ohio, for Appellee.
                                      ,
                                      -
 SUNOCO , INC. (R&M),                                                                         _________________
                                      -
             Defendant-Appellee. -                                                                OPINION
                                      -                                                       _________________
                                     N
         Appeal from the United States District Court                       CLAY, Circuit Judge. Plaintiffs, Tom-Lin Enterprises,
        for the Southern District of Ohio at Columbus.                    Inc., et al., appeal from the district court’s order entered on
    No. 00-00452—Terence P. Kemp, Magistrate Judge.                       November 9, 2001, granting summary judgment in favor of
                                                                          Defendant, Sunoco, Inc. (R&M) (“Sunoco”), on Plaintiffs’
                      Argued: May 1, 2003                                 complaint for breach of contract, breach of the implied
                                                                          covenant of good faith and fair dealing and violation of open
            Decided and Filed: November 12, 2003                          price term obligations codified in Ohio Rev. Code Ann.
                                                                          § 1302.18. For the reasons set forth below, we AFFIRM the
         Before: CLAY and GIBBONS, Circuit Judges;                        district court’s order.
                 CLELAND, District Judge.*
                                                                                               BACKGROUND
                                                                                               Procedural History
                                                                            Plaintiffs are twelve individual businesses and business
                                                                          persons who operate gasoline service station facilities which
                                                                          they either own or lease from Sunoco. Each Plaintiff sells
                                                                          Sunoco-branded gasoline to the motoring public in Central
    *
     The Ho norable Robert H. Cleland, United States District Judge for   Ohio. Plaintiffs allege that, since 1995, Sunoco has violated
the Eastern District of Michigan, sitting by designation.

                                  1
No. 01-4326                  Tom-Lin Enterprises, et al.      3    4     Tom-Lin Enterprises, et al.                No. 01-4326
                                       v. Sunoco, Inc.                   v. Sunoco, Inc.

Ohio Rev. Code Ann. § 1302.18 by charging them                     Petroleum (“BP”), Marathon and Citgo compete with each
excessively high prices for its gasoline. Plaintiffs filed their   other to sign new accounts for the operation of their gasoline
complaint on March 10, 2000 in the Franklin County Court of        service stations with individuals who own or control their real
Common Pleas in Ohio. Sunoco removed the case to the               property.
district court on April 17, 2000, based on diversity
jurisdiction. On July 14, 2000, Plaintiffs filed an amended          Sunoco provides certain financial incentives to encourage
complaint to state Sunoco’s proper name.                           such individuals to maintain the Sunoco “flag” at their
                                                                   stations. First, Sunoco provides a lump-sum cash payment to
  At the close of extensive discovery, which resulted in the       be used for improvements or enhancements to the property.
production of thousands of documents and 45 depositions,           Ten of twelve Plaintiffs have received between $50,000 and
Sunoco moved for summary judgment on all three counts of           $75,000 for signing their DFAs. In total, Sunoco has
Plaintiffs’ complaint. Plaintiffs did not contest Sunoco’s         committed to pay these Plaintiffs over $1,000,000 in lump-
asserted grounds for summary judgment on the claims for            sum payments since 1995. Second, Sunoco provides these
breach of contract and breach of the implied covenant of good      Plaintiffs with “running consideration,” which are cents-per-
faith and fair dealing. By order entered on November 9,            gallon credits earned by purchasing negotiated threshold
2001, the district court dismissed Plaintiffs’ complaint.          amounts of gasoline from Sunoco; these credits apply to
Plaintiffs timely filed a notice of appeal on December 7,          future purchases of gasoline from Sunoco. Third, Sunoco
2001. They take issue only with the district court’s dismissal     operates a Volume Improvement Program (“VIP”), a rebate
of their claim alleging a violation of Sunoco’s open price term    program which rewards dealers who purchase a certain
obligations codified in Ohio Rev. Code Ann. § 1302.18.             amount of gasoline with cents-per-gallon credits against
                                                                   subsequent purchases. The VIP applies to all Plaintiffs,
                            Facts                                  regardless of whether they own or control their real property.
  A. Plaintiffs’ Business Operations                                 All but one of the plaintiffs who own or control their real
                                                                   property have renewed their DFAs with Sunoco since 1995.
   With two exceptions, each Plaintiff operates a single           During the pendency of this litigation four Plaintiffs have had
gasoline service station facility in Central Ohio which is         the opportunity to switch gasoline suppliers, but have signed
either owned or leased from Sunoco; two Plaintiffs operate         new DFAs with Sunoco.
two Sunoco service stations. Each Plaintiff is a party to a
Dealer Franchise Agreement (“DFA”), which sets forth the               B. Sunoco’s Retail Operations and Pricing System in
terms of its relationship with Sunoco. The DFAs are                       Central Ohio
substantially the same in that they contain similar or identical
terms regarding the price Sunoco will charge for its gasoline.       Sunoco is a refiner and marketer of petroleum products
                                                                   headquartered in Philadelphia, Pennsylvania. Like its
  Most Plaintiffs own or control the real property on which        principal competition (BP, Shell and Marathon), Sunoco
their service stations are located and, therefore, are able to     markets and distributes its gasoline in Central Ohio in three
switch gasoline suppliers upon the expiration of their DFAs.       ways: (1) directly at company-operated stations; (2) through
In the Columbus, Ohio area, major refiners like Shell, British     use of a jobber – a person or corporation who purchases
No. 01-4326                       Tom-Lin Enterprises, et al.            5    6     Tom-Lin Enterprises, et al.                No. 01-4326
                                            v. Sunoco, Inc.                         v. Sunoco, Inc.

gasoline directly from Sunoco and/or other refiners at what is                lower than the DTW price because Sunoco does not have to
called the “rack” price and transports the gasoline to one or                 transport the gasoline purchased by a jobber. Often, however,
more retail outlets, either with its own equipment or through                 Sunoco will lower its profit margin on the DTW price, and
a subcontractor; or (3) through independent retailers known                   hence the DTW price charged to direct-supply dealers,
as dealers. All of the plaintiffs fall into the third category.               because a particular dealer may be faced with a competitor
The independent retailers pay a different price for gasoline                  who sets its price below the average street price in the zone;
than the jobber – the “Dealer Tank Wagon” or “DTW” price.                     this lower price takes the form of a rebate that applies to the
                                                                              next load of gasoline purchased from Sunoco.
  Sunoco is a pricing follower in Central Ohio, whereas BP
and Marathon are the pricing leaders. This means that                           Company operated stations and jobbers are notified in
Sunoco’s pricing strategy is to follow the lead of BP and                     advance of any proposed price change in the afternoon prior
Marathon. Sunoco attempts to set its rack and DTW prices in                   to the change taking effect. In accordance with Section 3.02
such a way that it is neither the highest-priced nor the least                of the DFAs, independent retailers such as Plaintiffs are not
expensive supplier in the market.                                             advised in advance of any proposed price change, and they
                                                                              pay Sunoco whatever DTW price is in effect on the day they
   Sunoco sets both its rack and DTW prices on a daily basis.                 receive a scheduled delivery.
Its rack price is based upon a “market basket” of pricing
information all of which relates to other major refiners’ rack                    C. Sunoco’s Change in Business Focus
prices. Sunoco subscribes to the Oil Pricing Information
Service (“OPIS”) in order to determine the jobber rack prices                    Prior to 1995, Sunoco generally sought to maintain a
of its competitors. Sunoco sets its rack price somewhere in                   separation between jobber retailers, jobber-supplied retailers
the middle of the rack prices being charged by its competitors.               and retailers such as Plaintiffs who are supplied directly by
Sunoco sets its DTW price based on a survey of what other                     Sunoco. In 1995, Sunoco created a MidAmerica Division
major competitors are charging at their retail stations in each               with a new structure that combined the markets previously
of Sunoco’s “pricing zones.” Sunoco then reduces that                         segregated for Plaintiffs and jobber retailers. Sunoco’s 1995
average retail price by a six to nine-cent margin, which is                   strategic plan emphasized growing the number of Sunoco-
subject to change depending upon changes in prices in the                     branded stations without investing the significant capital
relevant area.1 The rack price charged jobbers is typically                   required to purchase new stations. Sunoco sought to grow its
                                                                              brand through jobbers by offering to sell jobbers real property
                                                                              or by assigning supply contracts Sunoco had with direct
    1                                                                         dealers in exchange for the jobber’s agreement to increase the
      Sunoco sells primarily two grades of gasoline, namely 86 and 94         volume of gasoline purchased.
octane, which are blended at the retail pumps to ob tain additional interim
grades. In its direct sales to retail dealers, Sunoco maintains a price per
gallon spread between the 86 octane and the 94 octane of 15 ½ cents over
the DTW price. In its gasoline sales to jobbers, Sunoco strives to
maintains a set spread betwe en 86 octane and 94 o ctane of 11 ½ ce nts
over the rack price; the actual p rice spread over the rack price is
determined based on the spread between Sunoco’s comp etitors’ lower and
higher grade products as reflected in the OP IS repo rts.
No. 01-4326                       Tom-Lin Enterprises, et al.            7    8       Tom-Lin Enterprises, et al.                    No. 01-4326
                                            v. Sunoco, Inc.                           v. Sunoco, Inc.

                           DISCUSSION                                         observance of reasonable commercial standards of fair
                                                                              dealing in the trade.” Id. § 1302.01(A)(2);3 see also id.
  A. Standard of Review                                                       § 1302.18 cmt. 3 (referencing applicability of definition of
                                                                              “good faith” from § 1302.01).
  We review a district court’s grant of summary judgment de
novo. Parker v. Metro. Life Ins. Co., 121 F.3d 1006, 1009                        Comment 3 to § 1302.18 states that “in the normal case a
(6th Cir. 1997). A moving party is entitled to summary                        ‘posted price’ or a future seller’s or buyer’s ‘given price,’
judgment as a matter of law when there are no genuine issues                  ‘price in effect,’ ‘market price,’ or the like satisfies the good
of material fact. Id.; Fed. R. Civ. P. 56(c). All evidence must               faith requirement.” Id. § 1302.18 cmt. 3 (emphasis added).
be viewed in the light most favorable to the nonmoving party.                 Several courts, including the Fifth Circuit Court of Appeals,
Ellison v. Garbarino, 48 F.3d 192, 194 (6th Cir. 1995).                       have interpreted Comment 3 to mean (1) in a case that is not
However, “[t]he moving party need not support its motion                      “normal,” objective reasonableness (e.g., pricing at market
with evidence disproving the nonmoving party’s claim, but                     rates or at the price in effect) is a necessary, but not a
need only show that there is an absence of evidence to support                sufficient, condition for a finding of good faith and (2) a case
the nonmoving party’s case.” Celotex Corp. v. Catrett, 477                    is not “normal” when the seller lacks subjective good faith.
U.S. 317, 325 (1986).                                                         See, e.g., Mathis v. Exxon Corp., 302 F.3d 448, 454-57 (5th
                                                                              Cir. 2002) (applying Texas law; holding that there is both a
  B. Propriety of an Open Price Term under Ohio Law                           subjective test (“honesty in fact”) and an objective test
                                                                              (“reasonable commercial standards”) for determining the
   Ohio law permits parties “if they so intend [to] conclude a                propriety of a seller’s price-setting when price is an open
contract for sale even though the price is not settled.” Ohio                 term); HRN, Inc. v. Shell Oil Co., 102 S.W.3d 205, 214 (Tex.
Rev. Code Ann. § 1302.18(A) (West 2003). Ohio law                             Ct. App. 2003) (same). According to this view, a seller with
imposes two obligations in this context. First, the price must                the responsibility to fix a reasonable price does not act in
be “a reasonable price at the time for delivery if … nothing is               subjective good faith when it engages in price discrimination
said as to price.” Id. § 1302.18(A)(1). Second, if the seller is              – by treating similarly-situated buyers differently – or when
to fix the price under the contract, the price must be fixed “in              the seller is otherwise motivated by an intent to injure the
good faith.” Id. § 1302.18(B). These two requirements                         buyer. See Mathis, 302 F.3d. at 457 (“Any lack of subjective,
essentially track the definition of “good faith” applicable to                honesty-in-fact good faith is abnormal; price discrimination
transactions between merchants2 – “honesty in fact and the                    is only the most obvious way a price-setter acts in bad faith
                                                                              ….”).
    2
      It is undisp uted that all the parties are “merc hants” as defined in
                                                                                This Court recognizes that the Fifth Circuit’s interpretation
Ohio Rev. Code A nn. § 1302.5 (defining “merchant” as “a person who           of “good faith” may be plausible under Texas law. It is not
deals in goods of the kind or otherwise by his occ upation ho lds himself     within the province of this Court, however, to similarly
out as having knowledge or skill peculiar to the practices or goods
involved in the transaction or to whom such knowledge or skill may be
attributed by his employment of an agent or broker or other intermediary          3
who by his occupation holds himself out as having such knowledge or               Ohio Rev. Cod e Ann. § 1302 .01(A)(2 ) is identical to the Uniform
skill”).                                                                      Comm ercial Code (“UCC ”) § 2-103(1)(b).
No. 01-4326                       Tom-Lin Enterprises, et al.            9    10    Tom-Lin Enterprises, et al.                 No. 01-4326
                                            v. Sunoco, Inc.                         v. Sunoco, Inc.

interpret Ohio’s counter-part where the Ohio courts already                   this showing, it follows, a fortiori, that Plaintiffs cannot
have passed on the issue. In non-merchant transactions,                       show that Sunoco’s actions were commercially unjustifiable.
“good faith” generally means “honesty in fact in the conduct                  As discussed below, Plaintiffs have failed to create a genuine
or transaction concerned.”         Ohio Rev. Code Ann.                        issue of material fact on either point, and, therefore, the
§ 1301.01(S). The Ohio Supreme Court has held that honesty                    district court properly granted summary judgment for Sunoco.
in fact does not exist when the actions at issue are
“commercially unjustifiable.” Master Chem. Corp. v. Inkrott,                       1.   “Observance of Reasonable Standards” Test
563 N.E.2d 26, 31 (Ohio 1990); accord Needham v.
Provident Bank, 675 N.E.2d 514, 523 (Ohio Ct. App. 1996);                        For a price to be fixed in good faith, the price must be set
Jim White Agency Co. v. Nissan Mot. Corp. in U.S.A., 126                      pursuant to reasonable commercial standards of fair dealing
F.3d 832, 834 (6th Cir. 1997) (applying Ohio law). The                        in the trade. Ohio Rev. Code Ann. §§ 1302.18 and
merchant definition of “good faith” applicable in this case                   1302.01(A)(2). A priced fixed pursuant to § 1302.18 need not
incorporates the honesty in fact definition from § 1301.01(S)                 be the lowest possible price. Cf. Havird Oil Co., Inc. v.
and adds an additional requirement – “the observance of                       Marathon Oil Co., Inc., 149 F.3d 283, 290 (4th Cir. 1988)
reasonable standards of fair dealing in the trade.” Id.                       (finding that “[w]hile it is true that some of Havird’s
§ 1302.01(A)(2). Thus, under Ohio law, to show that a                         competitors were selling gasoline at retail for less than Havird
merchant-seller lacks good faith in fixing a price pursuant to                could obtain gasoline at wholesale, this does not constitute a
a contract with an open price term, it must be shown that the                 breach of contract on the part of Marathon”); TCP Indus., Inc.
price was not fixed in a commercially reasonable manner and,                  v. Uniroyal, Inc., 661 F.2d 542, 548 (6th Cir. 1981)
moreover, that the pricing was commercially unjustifiable.                    (recognizing that “[n]either the [UCC] nor the Official
These are two distinct issues, and both involve an objective                  Comments to the [UCC] require that a merchant-seller price
analysis of the merchant-seller’s conduct.4                                   at fair market value under a contract with an open price term,
                                                                              but specify that prices must be ‘reasonable’ and set pursuant
  The issue in this case is whether Plaintiffs have produced                  to ‘reasonable commercial standards of fair dealing in the
enough evidence to create a genuine issue that Sunoco                         trade’”) (quoting UCC § 2-103); Au Rustproofing Ctr., Inc. v.
exercised its price-fixing obligation under the DFAs in a                     Gulf Oil Corp., 755 F.2d 1231, 1235-36 (6th Cir. 1985)
commercially unreasonable fashion. If Plaintiffs cannot make                  (stating that “Au contends that because its competitors sold
                                                                              gasoline for less than Au could buy it from Gulf, Gulf’s prices
                                                                              were unreasonable . . . In our view, this contention is
    4                                                                         insufficient to establish that prices set by Gulf contravened
      Even if this Court were to adopt the objective/subjective distinction   reasonable commercial standards of fair dealing in the
applied by the Fifth Circuit, as discussed below, Sunoco would be entitled
to summary judgment because of Plaintiffs’ utter lack of evidence of
                                                                              gasoline market or otherwise constitute bad faith or
decreased profits and co mpe titive injury. Cf. Ma this, 302 F.3d at 457-58   commercially unreasonable behavior”); Ajir v. Exxon Corp.,
(affirming jury verdict on claim for violation of open price term where       Nos. 97-17032, 97-17134, 1999 WL 393666, at *7 (9th Cir.
evidence showed that “Exxon planned to replace a number of franchisees        May 26, 1999) (unpublished) (stating that “[a]ll that the UCC
with [company-operated stations], that the DTW price was higher than the      requires is that a price term be reasonable, not the lowest
sum of the rack price and transportation, that Exxon prevented the
franchisees from purchasing gas from jobbers after 19 94, and that a
                                                                              possible”).
number of franchisees were unprofitable or non-competitive”).
No. 01-4326                       Tom-Lin Enterprises, et al.          11     12       Tom-Lin Enterprises, et al.                         No. 01-4326
                                            v. Sunoco, Inc.                            v. Sunoco, Inc.

   In order for Plaintiffs to meet their burden under § 1302.18,              inadmissible,6 the record is utterly devoid of any competent
Plaintiffs must prove, with respect to pricing, that Sunoco                   and relevant evidence of industry pricing standards, let alone,
violated reasonable commercial standards of fair dealing in                   Sunoco’s deviation from those standards.7 Accordingly, there
the gasoline marketing industry. Schwartz v. Sun Co., Inc.,                   is no evidence indicating the existence of a material factual
276 F.3d 900, 905 (6th Cir. 2002) (applying Michigan law).                    dispute concerning whether Sunoco’s pricing practices were
This burden requires Plaintiffs to produce background                         commercially unreasonable.
evidence of the manner in which other marketers of gasoline
in Central Ohio set their prices. Id. at 903, 905 (affirming                       2.     “Commercially Unjustifiable” Test
summary judgment for Sun on franchisee’s breach of contract
claim for wrongful pricing of gas on the ground that                            Plaintiffs cite to three events that purportedly demonstrate
franchisee “failed to introduce any background evidence                       Sunoco’s bad faith in setting the DTW price: (1) changes in
against which the commercial reasonableness of the prices
Sun had charged him could be assessed”). Plaintiffs,
however, have proffered no relevant, admissible proof.                        maintain for its dea lers. App ellants’ Br. at 28. The y assert that this
                                                                              differential in dealer marg in is evidence that Sunoco does not follow
   The only relevant background evidence appears to be a                      standard industry practice. Compliance with standard industry practice,
letter from an attorney at BP America, Inc., who prepared and                 however, does not dictate that all refiners price their gasoline identically,
                                                                              only that they loo k to the sa me ge neral criteria when setting prices. See
produced the letter to Plaintiffs in lieu of a formal production              TCP Indus., 661 F.2d at 548 (“[n]either the [UCC] nor the Official
of documents. According to the letter, BP determines DTW                      Comments to the [UCC] require that a merchant-seller price at fair market
prices based on retail street prices posted by its competitors                value under a contract with an open price term, but specify that prices
at retail outlets with an eye on the extent to which target sales             must be ‘reasonable’ and set pursuant to ‘reasonable commercial
volumes and profit margins have been satisfied. BP                            standards of fair dealing in the trade’”) (quoting UCC § 2-103 ).
determines rack prices based on information purchased from                         6
the Oil Price Information Service (“OPIS”); jobbers are                              The Court doubts that the letter is admissible evidence o f BP ’s
                                                                              pricing practices, since Plaintiffs have failed to establish a foundation as
notified of price changes in the late afternoon of the day                    to how the BP attorney has pe rsona l knowledge of such matters. See Fed.
before the new prices take effect. Sunoco similarly                           R. Evid. 602 (“A witness may not testify to a matter unless evidence is
determines DTW prices based on surveys of retail prices at                    introduced sufficient to support a finding that the witness has personal
competitors and determines jobber rack prices based upon a                    knowledge of the matter.”) Plaintiffs apparently agree. Although
survey of its competitor’s jobber rack prices as reflected in                 Plain tiffs obtained this evidence in discovery, they now question “how
                                                                              such an unverified re sponse co uld be dee med adm issible.” App ellants’
data from the OPIS. Like BP, Sunoco also provides advance                     Br. at 26-27.
notice of price changes to jobbers. The Court fails to see any
material difference between BP’s and Sunoco’s pricing                              7
                                                                                     As additional evidence of standard industry p ricing policy, Plaintiffs
practices.5 To the extent Plaintiffs argue that the BP letter is              cite to the price that jobbers fix when selling Suno co-branded ga soline to
                                                                              retail dealers– the rack price plus a few cents per gallon mark-up and
                                                                              freight costs. In o ther wo rds, the jobbers b uy the gaso line from Sunoco
    5
                                                                              for the rack price and re-sell it to retailers (not Plaintiffs) for a mark-up
      Plaintiffs argue that the six or seven cent dealer margin that Sunoco   plus the cost of delivery. The relevant standard, however, is the DTW and
subtracts from the average 87 octane retail price to obtain the DTW price     rack price that a refiner like Sunoco sets for gasoline, not the price for
is “dramatically different” from the 10 to 20 cent margin B P strives to      which a middleman re-sells a refiner’s gasoline to retailers.
No. 01-4326                  Tom-Lin Enterprises, et al.      13    14    Tom-Lin Enterprises, et al.                  No. 01-4326
                                       v. Sunoco, Inc.                    v. Sunoco, Inc.

a rebate program for independent dealers; (2) Sunoco’s              Columbus area from direct-supply dealers like Plaintiffs to
adoption of a business plan in which Sunoco planned for an          jobber-retailers. The evidence shows that the relative
increase in jobber retailers relative to the number of              numbers of direct-supply dealers compared to jobber-retailers
independent dealers in the Columbus area; and (3) Sunoco’s          has, in fact, declined since 1995. Plaintiffs argue that a jury
decision to permit jobbers to compete directly with                 could infer from these facts that Sunoco intended to drive
independent dealers in the Columbus area. None of these             independent owners like Plaintiffs out of business, in favor of
events evidence a lack of honesty in fact, as that term is          jobber-run retailers. Plaintiffs are incorrect.
defined under Ohio law, because Plaintiffs have not created
a genuine issue of material fact that Sunoco’s actions were           Evidence that Sunoco anticipated and even planned for a
commercially unjustifiable.                                         reduction in direct-supply dealers does not, in itself, permit an
                                                                    inference that Sunoco intended to drive Plaintiffs out of
       a.   VIP Program                                             business. This is particularly true here, where there is no
                                                                    evidence in the record that Plaintiffs have been driven out of
   Prior to Sunoco’s change to the Volume Improvement               business or that jobber retailers either took business from any
Program in 1995, independent dealers had received a rebate          of the plaintiffs or forced Plaintiffs to reduce their prices in
of the DTW price for all gallons purchased over a monthly           order to retain business. Plaintiffs have submitted no
target figure, and the rebates increased as the volumes             evidence of lost profits or reduced revenue or gas sales
purchased increased. Although Sunoco reduced the rebates            stemming from Sunoco’s decision to permit jobbers to
roughly by half, Sunoco also reduced the DTW price for all          compete in the Columbus area.
of the gallons leading up to the monthly target figure.
According to Sunoco, the net effect to Plaintiffs from the            Indeed, the evidence of Sunoco’s conduct since 1995
reduction in the rebates was negligible, and Plaintiffs have not    supports the conclusion that Sunoco intends to maintain the
disputed this contention. Moreover, Plaintiffs have not             competitiveness of its independent dealers. First, Sunoco has
proffered any evidence of the rebate practices of other             renewed Plaintiffs’ DFAs since 1995. Second, as an
refiners. See Short, 799 F.2d at 423 (affirming directed            inducement to renew their DFAs, since 1995 Sunoco has paid
verdict for refiner on claim that refiner’s reduction in a rebate   and/or promised all but one of Plaintiffs over one million
program put plaintiff at a competitive disadvantage; finding        dollars, in the aggregate, to improve their respective
no evidence to support a finding of bad faith where plaintiff       properties. Third, those Plaintiffs who control the real
“did not produce evidence of the pricing or rebate practices of     property on which their businesses are located (all but three)
other oil companies”). Thus, on this factual record, no             have had the option to switch gasoline suppliers at the end of
reasonable jury could find that Sunoco’s change in the VIP          their contract terms if they find a better deal, yet all but one
program was commercially unjustifiable.                             of such Plaintiffs have chosen to continue to be directly
                                                                    supplied by Sunoco. Fourth, since 1995, those Plaintiffs who
       b. 1995 Business Plan                                        own their properties have received so-called “running
                                                                    consideration” from Sunoco – a cents-per-gallon credit for
  Plaintiffs also point to Sunoco’s 1995 business plan, as well     achieving negotiated monthly purchasing milestones. Based
as related documents and testimony from Sunoco officials,           on the totality of the evidence, Sunoco’s projection of a
which show that Sunoco projected a gradual shift in the             decline in direct-supply retailers does not provide a sufficient
No. 01-4326                  Tom-Lin Enterprises, et al.      15    16   Tom-Lin Enterprises, et al.                  No. 01-4326
                                       v. Sunoco, Inc.                   v. Sunoco, Inc.

factual basis from which Sunoco’s alleged intent to drive              Even assuming that this Court’s comment about Schwartz’s
Plaintiffs out of business could reasonably be inferred.            Robinson-Patman Act claim is relevant to a UCC claim for
                                                                    violation of an open price term, it would be unavailing to
       c.   Competition with Jobbers                                Plaintiffs. Schwartz had submitted evidence showing not
                                                                    only lost profits, but also that the volume of gasoline sold at
   Related to Sunoco’s 1995 business plan, Plaintiffs also          his stations decreased when the jobbers opened competing
point to the fact that, in 1995, Sunoco began to permit jobbers     stations nearby and sold the same gas at a lower retail price.
to establish Sunoco stations in the Columbus market; prior to       Thus, the Court found that the jury did not have to make a
that time, Plaintiffs’ potential competitors in the area were       vast inferential leap to find that Sun’s price discrimination
either independent business owners like themselves or               had negatively impacted Schwartz’s bottom line. Id. at 905.
company-owned stores. As noted above, however, there is no          In contrast, Plaintiffs in the instant case have submitted no
evidence whatsoever of competitive injury, such as lost             evidence of financial injury, so there would be no harm for a
business volume or decreased profit margins. There is no            factfinder to link to Sunoco’s allegedly wrongful conduct.
evidence that Plaintiffs have been injured financially or even
that they are worse off as a class than the jobbers with whom          At bottom, Plaintiffs have ignored the significant
they allegedly compete and who have significant overhead            distinctions between direct-supply dealers and jobbers.
costs that Plaintiffs do not have.                                  Jobbers are responsible for maintaining and improving the
                                                                    properties they own; maintaining their own offices and
   Plaintiffs instead argue that they are not required to proffer   petroleum storage facilities; bearing the risk of environmental
evidence of competitive harm. As support, they quote the            liability; maintaining a sales staff to service their retail
following statement from this Court’s decision in Schwartz:         locations; and transporting the gasoline from the refiner’s
“It is sensible to acknowledge that whenever there is price         terminals to their own retail locations. The jobber rack price
discrimination of the sort involved here, the overall financial     is generally lower than the DTW price to compensate the
health of the disfavored purchaser will usually be affected for     jobber for these functions, functions that Sunoco otherwise
the worse.” Schwartz, 276 F.3d at 905. This statement,              would have to perform. Accordingly, a jobber’s contract with
however, was made in the context of Schwartz’s Robinson-            Sunoco reflects its additional responsibilities and its
Patman Act claim, where proof of antitrust injury is not            entitlement to the rack price. Conversely, a direct-supply
“unduly rigorous.” Id. at 904. Tellingly, this Court affirmed       retailer’s contract reflects its lesser responsibilities and its
the dismissal of Schwartz’s UCC claim, noting that it was           obligation to pay the generally higher DTW price. Plaintiffs
incumbent on Schwartz “to prove that the prices he paid Sun         appear simply to desire more favorable price terms in their
for its gasoline, even if they were higher than what others in      contracts, contracts that several Plaintiffs have renewed yet
the same situation paid for the same product, were illegal.”        again during the pendency of this litigation. It is not the role
Id. at 905. Since the evidence showed that Sun had set the          of this Court, however, to re-write Plaintiffs DFAs that were
rack price pursuant to reports of the OPIS, the Court held that     negotiated at arm’s-length, nor to ensure that Plaintiffs obtain
Schwartz failed to establish a prima facie case that Sun had        the best possible prices for Sunoco gasoline. See Au
violated reasonable commercial standards of fair dealing. Id.       Rustproofing, 755 F.2d at 1235 (finding that refiner was not
Plaintiffs face the same situation with respect to Sunoco,          unreasonable and did not act in bad faith because it had no
which establishes its rack price in the same manner.                contractual duty to keep retailer competitive by charging a
No. 01-4326                  Tom-Lin Enterprises, et al.     17
                                       v. Sunoco, Inc.

lower DTW price; “none of the documents restricts Gulf’s
discretion to set the tankwagon price, obligates Gulf to sell
gasoline to Au at competitive prices or otherwise establishes
Gulf’s liability for failure to keep Au competitive”); Ajir,
1999 WL 393666, at *6 n.7 (“Exxon is in the business of
selling gasoline to make a profit, and has entered into the
sales contracts with its dealers to further that purpose.
Reading the contracts to impose the duty on Exxon to assure
its dealers get the lowest possible prices . . . is thus
inconsistent with the purpose of the contracts.”).
Accordingly, summary judgment for Sunoco was fully
warranted.
                      CONCLUSION
  Plaintiffs have failed to create a genuine issue of material
fact that Sunoco’s DTW prices were commercially
unreasonable. The only relevant “evidence” on the record
suggests that Sunoco complied with standard pricing
practices. Plaintiffs also have not created a genuine issue that
Sunoco’s setting of rack prices relative to the DTW prices
was commercially unjustifiable. All Plaintiffs have shown is
that Sunoco planned for a relative reduction in dealer-
supplied retailers compared to jobber-supplied retailers. They
have not proffered any facts from which it could be
reasonably inferred that any specific actions Sunoco took to
effectuate this plan injured Plaintiffs in any way. For these
reasons, we AFFIRM the district court’s order granting
summary judgment to Sunoco on Plaintiffs’ complaint.