This аction was brought by the plaintiff Leeward Petroleum, Ltd. (“Leeward”), a Bermuda corporation, against the defendants Mene Grande Oil Co. (“Meneg”), a Delaware corporation, and Gulf Oil Corporation (“Gulf”), a Pennsylvania corporation, to redress a breach of contract and certain violations of the anti-trust laws. The defendant Gulf has moved to dismiss the allegations pending against it, under Rule 12(b)(6), Fed.R.Civ.Proc.
The cause of action arises out of certain dealings between the plaintiff and the defendant corporаtions. According to the allegations of the Amended Complaint, 1 which must be taken as true for purposes of this motion, the plaintiff sought to purchase Venezuelan crude oil from Meneg, which held a concession from the Venezuelan government. By letter, plaintiff accepted Meneg’s offer for the sale of 3.6 million barrels of Venezuelan crude, the transaction to be carried out in the form of an “intra-Venezuelan” sale, in order to avoid certain Venezuelan government restrictions on sales. Plaintiff then cоntracted to resell the crude to a United States refiner, who is not a party here.
Prior to the time for its performance of the contract, Meneg informed the plaintiff that it would not deliver the crude oil, stating that it had been notified by the Venezuelan government that the transaction was prohibited. Leeward refused to accept this purported act of state as a force majeure sufficient to release Meneg, and pressed for performance. Negotiations commenced on this point and continued until Leeward was told that Gulf, the grandparent of Meneg,
2
had ordered Meneg not to make the sale, and that all further negotiations should be carried on with Gulf. Leeward’s president flew from Caracas, Venezuela to Pittsburgh, Pennsylvania, and met with Gulf representatives, but was unable to obtain Venezuelan crude at the bargained-for price.
3
The contract remained
From this factual predicate, Leeward pleads several causes of action. The first cause of action, not presently before the Court, is stated against Meneg for ordinary breach of contract. 4 Leeward next asserts several alternative forms of action against Gulf, including tortious conspiracy to• breach the contract; tortious interference with contract rights; and violation of the anti-trust laws. To these Gulf objects on the grounds that the Amended Complaint fails to set forth with specificity the required grounds for such causes of action; and that the facts alleged do not constitute such causes of action. For the reasons discussed in Ira, the Court denies Gulf's motion, and Gulf will therefore havе the time specified in Rule 12(a)(1) to file a responsive pleading.
A, Legal Standard
The standard by which a Court determines the sufficiency of a complaint under a Rule 12(b)(6) motion is well known, and not here in dispute. All well pleaded allegations of the complaint must be taken as true. Cruz v. Beto,
Under this standard, the present complaint is sufficient to state a cause of action. It is true that the complaint could be more artfully drawn, and that the language used is sometimes less than crystal clear. 5 Nonetheless, it fаirly puts the defendant Gulf on notice as to the nature of the claims, and the substance of the allegations; and the Court cannot say as a matter of law that the plaintiff is entitled to no relief under any provable state of facts.
B. Gulf's Claims
~: Count 2
Count 2 of the Amended Complaint recites certain of the facts set out above, as they allegedly occurred following Meneg's initial letter of acceptance. The Count further alleges that Meneg was and is the "alter ego" of Gulf, and that therefore Gulf is also liable for the breach of contract. Gulf urges dismissal of this ~lount on the grounds that a corporate veil may be pierced only when there are showings of fraud in the use of the second corporation.
The Court does not need to address specifically that issue. The facts pleaded in Count 2 are sufficient, if proven, to allow the inference that Gulf by its actions during the negotiations became a principal on the contract between Meneg and Leeward, and might therefore be liable on the contract itself. See generally, Fluоr Corp. v. United
2. Count 3
Count 3 realleges the facts of Count 2, and further alleges a tortious conspiracy. Gulf attacks the Count on two grounds, urging that it is fatally inconsistent; and that it does not plead the facts of a conspiracy with sufficient detail.
Both grounds of dismissal must fail. As to inconsistency, the Court merely notes that Rule 8(e)(2) specifically allows all pleadings no matter how inconsistent.
6
Cf. Quinones v. United States,
It is a longstanding rule in this Circuit that a mere general allegation of a conspiracy is insufficient.
Black & Yates, Inc. v. Mahogany Assoc.,
3. Count 4
Count 4 realleges the foregoing facts and further alleges that Gulf tortiously interfered with Leeward’s contractual rights. Gulf asserts that the count is insufficient in that it is inconsistent; and fails to allege that the interference was “intentional”, and thus is insufficient as a matter of law.
The issue of inconsistency has been decided above, and the Court will not repeаt the discussion here. It is sufficient to say that the allegations are a proper alternative pleading, under Rule 8(e)(2) despite minor inconsistencies in the allegations. When read as a whole, they fairly apprise the defendant of the charges leveled against it.
The Court will assume arguendo that “intention” is required in order to prove the tort of interference in contract rights. 7 See Restatement of Torts § 766. If intent is, as a matter of law required in order to make out a case of interference with contractual rights, then Leeward will have to prove suffiсient facts at trial to allow such a finding. The actual existence of intent, however, is a proper issue only on summary judgment or at trial.
The Count is sufficiently pleaded, since the allegations read as a whole can lead to an inference that the actions were carried on with intent on the part of Gulf; that is,
Gulf further urges that it cannot in any event be charged with tortious interference because its conduct is privileged. Gulf states that a grandparent or parent has an absolute right to control the behavior of a subsidiary for the benefit of the parent. 8 This Court cannot now accede as a matter of law that such a privilege, if it exists, applies here. If such a privilege exists, it exists only for рroper purposes by use of proper means, not for the commission of torts; see note 8, supra. In any event, before the Court could rule on such a question, it would require a factual showing on the background of the transaction, and the respective interests of all the parties. Such a factual showing must await summary judgment or trial.
Moreover, if such a privilege were held to exist, Gulf might well be bound by its burdens as well as its benefits. The Court under those circumstances might well be able to find the separate corporate existence of Meneg to be a mere sham. The Court, therefore, does not now address the issue of the interplay between parent and subsidiary, absent a much fuller factual showing. The motion to dismiss is denied.
4.. Count 6
Count 6 pf the Amended Complaint alleges that Meneg and Gulf took the actions described supra for the purpose of protecting the "intra-firm" price for Venezuelan crude oil, and thus to maintain the price in other markets under Federal Energy Administration regulations. The Count then alleges that the result is a violation of both Section 1 of the Sherman Act, 9 and the Wilson Act 10 since the actions were taken by an importer in inter-national commerce. Gulf seeks dismissal of this Count on several grounds, urging that Leeward has failed to allege the conspiracy with requisite specificity; that the acts alleged could not in any way have actually succeeded in influencing market prices under FEA regulations; that Leeward has failed to establish that the result of any such scheme would be an injury to it; and that in any event, no such conspiracy is possible because Gulf is privileged in its relationshiр to Meneg, its subsidiary.
The issue of the specificity of the complaint with regard to conspiracy has been addressed. As noted, supra, the complaint identifies the parties to the "agreement"; the time of the conspiracy; the purpose of the conspiracy; and actions taken to effectuate it. No further specificity is required in the complaint. Any additional data which Gulf might seek can be acquired through discovery.
Gulf continues to urge its "privilege" to make agreements with its subsidiary, an argument which is akin to that raised supra with regard to "tortious interference." The essential point of the argument is that while some "bathtub conspiracies" have been found illegal by the Supreme Court, see Perma Life Mufflers, Inc. v. Interna
The Court will not on a dismissal motion undertake to determine either whether the alleged acts by Gulf in fact lie within the Colgate privilege; or whether its incorporation of Meneg was designed to allow it or was used by it to maintain artificial price levels in selected markets. The Court has before it on this motion neither facts nor affidavits. The line separating reasonable and unreasonable behavior between а parent and a subsidiary is a cloudy one. This Court cannot find Gulf’s conduct absolutely privileged on the present record, even though it is cognizant of the claims of commentators on the “economic reasonableness” of such a form of doing business.
Similarly, the Court cannot now conclude that the FEA regulations allowed Gulf to utilize such a scheme to maintain prices. The Court has examined the complex regulations on base pricing contained in 10 CFR § 212.1 et seq., and finds them impossible of solution absent proof on issues such as the aсtual amount of production in a given month from a given country, etc. 12 Any determination of the efficacy of such a purported restraint must await summary judgment or trial.
The last issue raised by Gulf is the “standing” of Leeward. Gulf preferred to address the issue as a failure to plead necessary facts, viz. that an injury resulted to Leeward from the allegedly anti-competitive acts. For clarity of analysis, the Court prefers to address the issue as whether the injury which Leeward has alleged gives it standing to raise the anti-trust claim also asserted.
This difficulty arisеs because of the phrasing used by the plaintiff in making its complaint.
13
Read alone, the Amended
Defendants once again make the error, however, of reading the Count in isolation from the rest of the allegations of the Amended Complaint. Read as a whole, it is apparent that Leeward's Amended Complaint claims that the refusal by Gulf and Meneg to deal with it and the resulting breach of contract, were part and parcel of the alleged anti-trust scheme. Leeward has thus alleged a sрecific injury to it, with associated monetary damages, which it asserts has resulted from the anti-competitive behavior of the defendants.
The major difficulty with Leeward's claim is the relationship of that injury to the anti-trust claim involved. Although § 4 of the Clayton Act,
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which gave individuals the right to sue on anti-trust claims, is framed in very broad language, the courts have consistently restricted the language to prevent every contract claim from becoming an anti-trust claim. See In Re Multi-district Vehicle Air Pollution, supra,
Gulf asserted at oral argument that Leewаrd could not bring itself within the "target area" of the alleged anti-trust violation, because that area was the retail market, and Leeward never dealt in that market as a purchaser or a competitor. After careful consideration, this Court is of the opinion that the injury alleged, and the market alleged by inference, are sufficiently related to the anti-trust violation to give Leeward standing.
It should be noted first that this Court does not agree with Gulf's characterization of the "target area" test as the correct test to be applied. The Circuits have split in the use of so-called "target area" tests and so-called "direct-injury" tests. See In re Multi-district Vehicle Air Pollution,
Moreover, the Court is not convinced by the Ninth Circuit's attempt to read Perkins v. Standard Oil Co.,
Judged by this standard, Leeward’s Amended Complaint is sufficient to overcome the motion to dismiss. Anti-trust complaints must be leniently read, with deference to proof of complex factual situations.
Radiant Burners, Inc. v. Peoples Gas, Light & Coke Co.,
Defendants’ motion to dismiss Counts 2, 3, 4 and 6 of the Amended Complaint is denied.
Notes
. The Original Complaint was replaced with an Amended Complaint after the defendants had moved to dismiss. After the Amended Complaint was filed, certain objections made to the Original Complaint were renewed as to the Amended Complaint.
. That is, Meneg is wholly-owned by a subsidiary of Gulf. It does not appear on the record whether the Gulf subsidiary is also wholly-owned.
.Gulf is alleged to have offered Leeward Ecuadorian crude oil, but at a substantially higher price than that agreed upon between Meneg and Leeward for Venezuelan crude.
. The Court is informed that Meneg may wish to pursue a forum non con veniens motion that had been raised in response to the initial complaint. The Court does not here determine that issue.
. For example, rather than alleging facts, plaintiff has adopted a pleading style in which it states what it would "show"; thus: "For a third cause of action, Plaintiff, adopting all of the allegations of Paragraphs 9 through 13 above, would show thаt Defendants Meneg and Gulf committed a tort ious conspiracy to breach the contract of 5 May, 1975, for which plaintiff is entitled to damages as set forth below." Amended Complaint at `~ 14.
. Rule 8(e)(2) provides in pertinent part:
“. . .A party may also state as many separate claims or defenses as he has regardless of consistency and whether based on legal, equitable, or maritime grounds.” (emphasis added). See 2a Moore’s Federal Practice ¶ 8.32 & n. 6.
. The Court notes that the defendants cited no Delaware cases for this point, and its own research has not disclosed any on point. There is, moreover, a threshold question of chоice of law, if there is assumed to be a difference in the standards of this tort among jurisdictions. Assuming intention is necessary, however, the Court has no need to address the question at this time.
. Gulf cites the Restatement of Torts, §~ 767, 769-7 1, which discuss a purported privilege from liability for interfering in contractual obligations when the interferor has a certain relation to the party being urged to breach, or not to enter into a contract. The Court notes first that there is no controlling citation for this Court given in defenda~t's brief. Moreover, the cases сited and indeed the language of the Restatement itself may differ from the privilege urged by Gulf. For example, one who has a financial or economic interest is pri~ileged to cause another "not to enter into or continue in a relation with a third person"; while only one who is "responsible for the welfare of another" is privileged "purposely to cause him not to perform a contract, or enter into or continue a business relationship." Compare, Restatement of Torts §~ 769, 770 and 771. And even in those cases where a privilege attaches, it attaches only where no improper means are used, and other conditions are met. Id.
. 15 U.S.C. § 1, as amended.
. 15 U.S.C. § 8, as amended.
.
See generally, Minnesota Bearing Co. v. White Motor Corp.,
. For example, 10 C.F.R. § 212.84(e), regulating base prices in foreign produced crude oil, reads in part:
“(1) The representative price for a reference crude oil shall be the lowest price at which fifty percent or more (as measured by the volume) of arms-length transactions in that reference crude oil and (at adjusted prices) related crude oils, loaded during a month of measurement and reported to the FEA, take place. . . . ” There follows several sections of exceptions and definitions. The Court cannot determine the efficacy of the purported scheme without knowing much more than it does about volume, arms-length transactions, and reference months.
.Count 6 of the Complaint reads as follows:
“For a sixth cause of action, and adopting the foregoing paragraphs 9 through 19, plaintiff would show that Defendant Gulf conspired with Defendant Meneg in refusing to sell Venezuelan crude oil to Plaintiff outside Venezuela on the grounds that it would adversely affect Gulf’s FEA intra-company transfer price or value (as aforesaid), in that it would substantially reduce the base price or value chargeable for future offshore sales, lowering the artificially high offshore sale price or value. This conspiracy and combination in restraint of commerce, maintaining a minimum price level on offshore crude oil was economically injurious to the general public and was in direct violation of 15 U.S.C.A. § 1 (1973) — the Sherman Anti-trust Act.”
Amended Complaint, ¶21. Paragraph 22 of the Amended Complaint alleging a violation of 15 U.S.C. § 8 is similarly phrased.
. "Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee." Act of October 15, 1914, 38 Stat. 731, § 4, 15 U.S.C. § 15.
. Thus, the Vehicle Air Pollution opinion finds in Perkins,
As this Court reads Perkins, Mr. Justice Black was much less concerned with "target areas" of anti-competitive behavior, then the
The Ninth Circuit’s view that
Perkins
approvingly cites
Karseai
and its target area test is also open to debate.
Perkins
states: “Thе Court of Appeals, in order to give guidance to the trial judge at the proposed new trial, noted that, in its opinion, these damages were not proximately caused by Standard’s violations and that Perkins should not recover for these damages in a second trial. For this proposition the Court of Appeals cited
Karseai Corp. v. Richfield Oil Corp.,
9 Cir.,
The passage is hardly unequivocal endorsement of a target test; it seems to speak more clearly of a concern for the victim, not the target.
. 15 U.S.C. § 15 formalizes this requirement by stating on its face that the plaintiff must have been injured in his trade or business.
See
note 15,
supra.
And
see Hawaii v. Standard Oil Co.,
. The existence of the agreement must be assumed, and the effects of the agreement likewise, since all the well-pleaded factual allegations of plaintiffs complaint must be taken as true. See p. 162, supra.
. The Court does not here address the question of whether all the injuries claimed in the complaint are in fact directly related to the anti-competitive scheme, or whether they need be. See note 16, supra. There is time enough after discovery and on motions for summary judgment to narrow the claims, if required.
