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GHEM, INC. v. MAPCO PETROLEUM

December 10, 1990

GHEM, INC., Plaintiff,
v.
MAPCO PETROLEUM, INC., Defendant



The opinion of the court was delivered by: WISEMAN, JR.

 THOMAS A. WISEMAN, JR., CHIEF UNITED STATES DISTRICT JUDGE

 This cause of action is presently before the Court on the motion of defendant Mapco Petroleum, Inc. ("Mapco") for summary judgment. The action is brought under the Tennessee Petroleum Trade Practices Act ("TPTPA"), Tenn. Code Ann. § 47-25-601 et seq. (1988). The amended complaint filed by Ghem, Inc. ("Ghem") alleges that Mapco has violated Tenn. Code Ann. § 47-25-611(a)(1)-(d)(1) by making, offering, or advertising "sales at retail at below cost to the retailer, where the effect is to injure or destroy competition or substantially lessen competition. . . ." See § 47-25-611(a)(1). On June 21, 1990, this Court ordered the parties to brief the issue concerning the elements necessary to state a private action under § 47-25-611(a), including whether the plaintiff must prove "antitrust injury."

 For the reasons elaborated below, this Court has determined that Ghem has failed to make out a prima facie case under Tenn. Code Ann. § 47-25-611(a), and, therefore, that Mapco is entitled to summary judgment.

 I. Statement of the Case

 Mapco operates "Delta Express" stores at 1251 Church Street, Murfreesboro, Tennessee, and at 103 North East Broad Street, Murfreesboro, Tennessee. Plaintiff, Ghem, operates a Shell station directly across the street from Mapco's Church Street Delta Express store. Mapco contends that its Church Street station competes with at least eight service stations, including the Shell station operated by Ghem. The other service stations with which the Church Street Delta Express station competes directly are Exxon, Marathon Oil (Econ), Texaco, Gulf, Jim Dandy, Jiffy Oil, and Dodge. See Defendant's Statement of Uncontroverted Facts, at 1.

 Ghem's amended complaint, filed February 20, 1990, alleges that Mapco has been engaged in the retail sale of gasoline in competition with Ghem since July 1, 1988, and that since October, 1988, has sold gasoline at below cost in bad faith and with the intent of injuring competitors in the market and substantially lessening the competition in violation of the TPTPA. Specifically, Ghem alleges Mapco sold unleaded gasoline at the East Broad Street station at a retail price below cost on February 9 and 10, 1989, February 17 through February 28, 1989, March 1 through March 8, 1989, March 20, 1989, April 7-9, 1989, April 19, 1989, July 1 and 2, 1989, and September 1 through 11, 1989, this price being below the price for unleaded gasoline set by Mapco's competitors. Also Ghem specifically charges that Mapco sold unleaded gasoline at the Church Street station at a retail price below cost, and below the prices set by its competitors, on January 3, 1989, April 28 through May 1, 1989, and September 1 through 11, 1989.

 Ghem contends it is entitled to compensatory and treble damages, attorney's fees, and an injunction against Mapco from selling gasoline below cost in violation of § 47-25-611(a) because Mapco's alleged policy and practice of selling gasoline below cost at both Murfreesboro stations has caused Ghem to suffer irreparable injury.

 Mapco makes two fundamental arguments. First, Mapco argues that Ghem has failed to state a cause of action under Tenn. Code Ann. § 47-25-611(a) because it has not shown two elements necessary to such a cause of action -- (1) that Mapco's below-cost sales had the actual effect of injuring or destroying competition or substantially lessening competition, and (2) that Ghem suffered an "antitrust injury." See Brief of Defendant Regarding Elements of Private Cause of Action Under Tenn. Code Ann. § 47-25-611(a). Second, Mapco argues, even if it offered unleaded gasoline for sale at below cost as defined in the TPTPA, such offers were made in a good faith effort to compete with the equally low or lower price of unleaded gasoline offered for sale by its competitors. This "good faith competition" defense, found in § 47-25-611(h), exempts certain cases of below-cost sales from the ambit of the TPTPA. *fn1"

 Because this Court agrees with Mapco's first argument, it is unnecessary to analyze the merits of Mapco's assertion of the good faith competition defense. Summary judgment is appropriate because Ghem has failed to make out a prima facie case under § 47-25-611(a).

 II. Summary Judgment Standard

 Summary judgment is appropriate only when "the moving party has carried its burden of showing that the pleadings, depositions, answers to interrogatories, admissions and affidavits in the record, construed favorably to the nonmoving party, do not raise a genuine issue of material fact for trial." Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir. 1987). In examining the record to determine whether a genuine issue of material fact exists, the district court must review all evidence in the light most favorable to the nonmoving party, and "all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 As the United States Supreme Court explained in Liberty Lobby, a dispute about a material fact is "genuine" within the meaning of Federal Rule of Civil Procedure 56 only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." 477 U.S. at 248. See also Miles v. Kohli, 917 F.2d 235, 241 (6th Cir. 1990).

 After reviewing the evidence in the light most favorable to Ghem, this Court has concluded that, because the plaintiff failed to establish two elements critical to its cause of action, a reasonable jury could not return a verdict for Ghem. Therefore, summary judgment is appropriately entered in favor of Mapco.

 III. Elements of Private Cause of Action Under § 47-25-611(a)

 Ghem claims Mapco violated § 47-25-611(a)(1), which provides the following:

 
47-25-611. Sales below cost to retailer. -- (a)(1) No dealer shall make, or offer or advertise to make, sales at retail at below cost to the retailer, where the effect is to injure or destroy competition or substantially lessen competition, unless such sales at retail are exempt under § 47-25-204.

 The purpose of the TPTPA's sales below cost prohibition is articulated in the statute itself:

 
Below-cost selling laws have been effective in preserving independent and small retailers and wholesalers in other trades and businesses from subsidized pricing. Subsidized pricing is inherently unfair and destructive to, and reduces competition in, the motor fuel marketing industry, and is a form of predatory pricing. An additional purpose of this ...

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