Dagher v. Saudi Refining Inc.

Texaco, Inc., Shell Oil Co. (Shell), and Saudi Refining, Inc. (collectively, the oil companies) (defendants) refined and sold gasoline. In 1996 Shell and Texaco formed a joint venture to market and sell gasoline in the western United States. Shell, Texaco, and Saudi Refining formed another joint venture to market and sell gasoline in the eastern United States. Texaco and Shell signed noncompete agreements, agreeing not to compete with either joint venture. Texaco and Shell also agreed to charge the same price for gasoline in the same market areas, though they continued to market their gasoline as being sold by separate brands. The oil companies justified their joint ventures by explaining that the joint ventures were efficient, saving over $800 million in costs each year. A group of over 23,000 Texaco and Shell service-station owners that included Fouad Dagher (collectively, the station owners) (plaintiffs) sued the oil companies, alleging that the companies formed their joint ventures to fix gasoline prices in a per se violation of § 1 of the Sherman Act. Saudi Refining filed a motion for summary judgment, arguing that the station owners did not have standing to sue Saudi Refining because the owners never bought gasoline directly from Saudi Refining. Texaco and Shell filed a motion for summary judgment, arguing that the station owners failed to demonstrate that the Sherman Act’s per se prohibition on price-fixing applied to their joint ventures. The district court granted both motions. The station owners appealed.