State v. Texaco, Inc.

¶1(concurring in the result). (1) Conflict with federal law. Texaco argues that there is a conflict between the Robinson-Patman Act 1 forbidding price discrimination in interstate commerce (hereinafter referred to *633as the “federal act”) and secs. Ag 112.01, 112.03, and 112.04, 1 Wis. Adm. Code (hereinafter referred to as the “Wisconsin regulation”). Texaco disclaims any contention that the federal act pre-empts the field of regulation of price discrimination where interstate commerce is involved, and concedes that if the Wisconsin regulation were entirely consistent with the federal act, the former could properly operate concurrently with the federal act.2 But Texaco claims that the differences between them are so substantial that since interstate commerce is involved, the Wisconsin regulation is superseded.3 The attorney general argues, however, that there is no conflict and no substantial difference between the federal act and the Wisconsin regulation. Counsel do not agree on the proper interpretation of the language of portions of the Wisconsin regulation and of the federal act, where different.

¶2Texaco tells us that the ultimate test for conflict between state and federal law is whether the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of congress.” 4

¶3Texaco perceives two substantial differences between the Wisconsin regulation and the federal act. The one which it stresses as the more important is the presence in the federal act of a defense sometimes referred to as the good-faith-meeting-competition defense.5 It claims that many acts of *634price discrimination which would be unlawful if the Wisconsin regulation were applied would be lawful under the federal act if they occurred under such circumstances that the good-faith-meeting-competition defense could be proved. Counsel do not agree as to the applicability of the defense to some types of transactions, and indicate that there is disagreement among the federal courts and the federal trade commission.6

¶4A second difference claimed is that under the Wisconsin regulation, it is unlawful to charge different prices for different grades of gasoline unless the difference can be justified on the basis of cost, but under the federal act a difference in prices of different grades need not bear any relationship to the difference in value of the goods.

¶5Although it must be conceded that the terms of the Wisconsin regulation and of the federal act are different in certain respects, both have the general purpose of preventing price discrimination where its effect may be substantially to lessen competition or tend to create a monopoly. Presumably there are, or could be if the regulation and act did not exist, a great many acts of price discrimination which are or would be violations of both.

¶6Let us assume that as Texaco claims there may be acts of price discrimination under circumstances such that they would be unlawful under the Wisconsin regulation but lawful, by reason of the good-faith-meeting-competition defense, under the federal act. Let us also assume that this is the type of conflict which must not exist under the supremacy clause. Texaco would avoid the conflict by suspending the entire Wisconsin regulation. It might, however, *635■be possible to avoid it by suspending the Wisconsin regulation only as to transactions where the conflict exists. I am not prepared at this time, simply by looking at the face of the federal act, to say that the Wisconsin regulation is so disruptive of the objectives of the federal act, that it is wholly suspended and inoperative. Particularly because of the complexity of economic regulation, I prefer to reserve judgment until the record before us shows the type of price discrimination being practiced and the extent to which defenses available under the federal act and not under the Wisconsin regulation can be proved. Not only will the existence of any conflict then be made more clear, but the record will doubtless provide a better groundwork for evaluation of the substantiality of the conflict.

¶72. Pendency of federal trade commission proceeding. The circuit court took judicial notice of a complaint issued by the federal trade commission against Texaco September 27, 1957, and concededly still pending. This complaint charges Texaco with discriminating in price between different purchasers of its gasoline of like grade and quality. The sales involved are alleged to have been made “to certain dealers located in and around the Portsmouth-Norfolk-Virginia Beach, Virginia, area, and other areas. . . . This practice of respondent has been followed in other areas of the United States as well as the afore-mentioned Norfolk-Portsmouth-Virginia Beach, Virginia, area.” The complaint closes with a notice of hearing as to why an order should not be entered requiring Texaco to cease and desist from the violations charged. The practices being attacked in the federal administrative proceeding may be, but are not necessarily, similar in substance to those under attack in this action.

¶8Texaco relies upon dictum in Ritholz v. Ammon7that “if it appeared that the federal trade commission had already taken jurisdiction over the practices sought to be *636dealt with by the state department of agriculture, a conflict might exist because both departments would be attempting to deal with the same conduct of plaintiffs. In such a situation, no doubt, the state would have to yield.” Reliance is also placed on decisions in the field of administrative regulation of labor relations affecting interstate commerce.8 It does not seem to me that congressional provision for administrative determination of the occurrence of violation of a law nor the actual commencement of a quasi-judicial proceeding to make such determination necessarily excludes state enforcement of the state law governing the same conduct, if the state and federal laws are not in material conflict. The greater the degree of discretion as to policy delegated by the congress to the administrative agency, the more likely concurrent state enforcement would be to disrupt or interfere with the purposes of the congress, but the more closely the federal administrative procedure is confined to a quasi-judicial determination of the facts as to violation and application of a consequence prescribed by law, the more reasonable it is to conclude that concurrent state enforcement of a consistent state law is acceptable to the congress.

¶9It seems to me that the federal trade commission proceeding has the character of a quasi-judicial proceeding for enforcement of the federal act and that if the Wisconsin regulation is sufficiently consistent with the federal act so that the Wisconsin regulation is not suspended, the institution of the federal trade commission proceeding does not prevent enforcement of the state regulation.

¶10While views which may be entertained by members of the federal trade commission are not determinative of the law, the attorney general has presented letters from the chairman and secretary stating that it is the opinion of the *637commission that the present action before the Wisconsin courts will not in any way interfere with the proceeding before the commission. The attorney general informs us that both the federal trade commission and the antitrust division of the federal department of justice have programs of fostering increased state-enforcement activity in this field in order to reduce the burden on the federal agencies. It seems desirable that this type of co-operation be approved, unless, of course, there are fundamental reasons in a particular area why it cannot be valid.9

¶113. Equal protection of law. Texaco argues that the Wisconsin regulation deprives it of equal protection of law and asserts that a gasoline wholesaler is the only seller who is not permitted to defend against a charge of price discrimination on the basis of good-faith-and-competitive necessity. It states that sellers prosecuted under sec. 133.17, Stats., are accorded such defense and that there are no conceivable facts “which justify singling out the petroleum industry for this special treatment in Wisconsin.” We can take judicial notice of many differences between the organization of the business of distributing gasoline and other types of business. It would be presumed that imposition of unique regulations upon a distinct type of business would be reasonably related to the peculiarities of the business until the contrary clearly appears.

¶124. Enforcement by court action alleged to be premature. It is apparently conceded that the Wisconsin regulation here involved stems from sec. 100.20, Stats. Sub. (1) thereof prohibits unfair methods of competition and unfair trade practices. Sub. (2) authorizes the department to issue “general orders” forbidding methods of competition or trade practices which are determined by the department to be unfair. The regulation here involved is a general order of *638that type. Sub. (3) authorizes the department, after public hearing, to issue a special order against any person, enjoining him from employing any method of competition or trade practice determined by the department to be unfair. Sub. (4) authorizes the attorney general to institute a proceeding leading to a special order.

¶13Sec. 100.24 (3), Stats. 1959, provides that any foreign corporation which violates “any order” issued under sec. 100.20 shall, upon proof in a court of competent jurisdiction, have its license to do business in this state canceled. Sub. (4) requires the attorney general to bring the action; subs. (1) and (2) contain similar provisions with respect to domestic corporations.10

¶14Texaco claims, apparently, that only a violation of a special order can give rise to an ouster action under sec. 100.24, Stats. It argues that the attorney general was required to proceed to obtain a special order against Texaco even though its acts were violation of a general order. I can see no basis for such an interpretation of secs. 100.20 and 100.24. Sec. 100.20 empowers the department to determine what methods and practices are unfair, as prohibited by sub. (1) thereof. It may either make such determination applicable to all persons engaging in such unfair methods or practices (a general order) or as to a particular person engaging in a particular unfair practice or method (a special order). Sec. 100.24 predicates ouster upon violation of “any order,” and that would refer to any general order as well as any special order. Sec. 100.26 (3) prescribes a criminal penalty for intentional violation of “any regulation” made under sec. 100.20.

¶15*639The attorney general here seeks an injunction, claiming that open, continuous, and intentional violation of law is a public nuisance and that he is authorized to bring this action for an injunction by sec. 280.02, Stats. Texaco claims the contrary, and that the concept of public nuisance does not embrace continuous violation of laws or regulations prohibiting unfair methods of competition or trade practices, unless the conduct interferes with public health, safety, or morals. While the leading cases in Wisconsin on this subject did involve activities more directly related to public morals 11 and to public health 12 than the distribution of gasoline, the language of those decisions did not so limit the concept of public nuisance, and, in my opinion, such limitation would be unsound. The policy of the state against monopoly, unfair methods of competition, and unfair trade practices is important, and continued violation of laws implementing that policy broadly affects the economic interests of the general public. Such violation does, in my opinion, constitute a public nuisance, enjoinable at the suit of the attorney general under sec. 280.02.

¶16I concur in affirmance of the order overruling Texaco’s demurrer.