Simpson v. Union Oil Co. of California

Simpson (plaintiff) entered into a lease agreement with Union Oil Co. of California (Union Oil). Simpson and Union Oil also entered into a consignment agreement. Simpson claimed that Union Oil required companies that leased Union Oil’s retail outlets also enter into consignment agreements, and Simpson did so. Under the terms of the consignment agreement, Simpson would sell gasoline consigned to it by Union Oil at prices fixed by Union Oil and receive payment by commission for the gasoline sold. Union Oil retained title to the gasoline consigned to Simpson’s possession and paid property tax on it until it was sold. Simpson was liable for all losses of the gasoline in his possession and paid the costs of operation. The consignment agreement would be terminated upon termination of the lease. While a consignee of Union Oil, Simpson sold gasoline for 27.9 cents per gallon, below the price of 29.9 cents per gallon fixed by Union Oil. Union Oil therefore refused to renew Simpson’s lease, and the consignment agreement was terminated. Simpson sued Union Oil, alleging that the intertwining of the consignment agreement and the lease allowed Union Oil to enforce its fixed price by conditioning renewal of the lease on compliance with the price it set, in violation of the Sherman Act. The district court ruled that Simpson had failed to establish a violation of the Sherman Act, and the court of appeals upheld. The United States Supreme Court granted a writ of certiorari to hear the case.