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U.S. Supreme Court

Simpson v. Union Oil Co. of California, 377 U.S. 13 (1964)

Simpson v. Union Oil Co. of California

No. 87

Argued January 15-16, 1964

Decided April 20, 1964

377 U.S. 13


Respondent oil company supplies gasoline in eight western States to numerous retailers, including petitioner, who lease outlets from respondent and enter into a "consignment" agreement under which respondent retains "title" to the gasoline until sold, pays property taxes thereon, and fixes the selling price therefor. Petitioner is compensated by a minimum commission, assumes operating costs and most types of losses on the gasoline, and carries personal liability and property insurance. The lease, like the "consignment" agreement, runs for a year, and is allegedly not renewable unless prescribed conditions are met, including the retailer's adherence to prices set by respondent. When petitioner, allegedly to meet a competitive price, sold gasoline below the fixed price, respondent, solely for that reason, refused to renew the lease and terminated the "consignment" agreement, whereupon petitioner brought this action for damages under § 4 of the Clayton Act for violation of §§ 1 and 2 of the Sherman Act. The Federal District Court, after hearings, granted respondent's motion for summary judgment, which the Court of Appeals affirmed, concluding that, although there were assumedly triable issues of law, petitioner had suffered no actionable wrong or damage.

Held: Resale price maintenance through a coercive type of "consignment" agreement like that involved here violates the antitrust laws, causing petitioner to suffer actionable wrong or damage. Pp. 377 U. S. 14-25.

(a) The "consignment" agreement and lease injure interstate commerce by depriving independent dealers of the exercise of free judgment whether to become consignees at all or remain consignees, and to sell at competitive prices. That the retailer can refuse to deal cannot under these circumstances immunize the supplier from the antitrust laws. P. 377 U. S. 16.

(b) An actionable wrong results whenever the restraint of trade or monopolistic practice has an impact on the market; and it is irrelevant that the complainant is only one merchant, or that, on respondent's failure to renew his lease, another dealer may take his place. Pp. 377 U. S. 16-17. chanroblesvirtualawlibrary

Page 377 U. S. 14

(c) A supplier may not use a coercive device, whether in the form of an agreement used coercively, or in any other form, to achieve resale price maintenance. United States v. Parke, Davis & Co., 362 U. S. 29, followed. P. 377 U. S. 17.

(d) A consignment, however lawful as a matter of private contract law, must yield to federal antitrust policy. P. 377 U. S. 18.

(e) The antitrust laws prevent the fixing of prices through many retail outlets by the "consignment" device. United States v. General Electric Co., 272 U. S. 476, distinguished. Pp. 377 U. S. 21-24.

(f) Although the issue of resale price maintenance under the Sherman Act is resolved here, the case must be remanded for a hearing on the other issues, including those raised under the McGuire Act and the damages, if any, suffered. P. 377 U. S. 24.

(g) The question is reserved whether there may be equities that would warrant only prospective application in damage suits of the rule governing price-fixing by the "consignment" device which this Court now announces. P. 377 U. S. 25.

11 F.2d 764 reversed and remanded.

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