Case No. RF342-00284

October 13, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Petitioner: Apex Oil Co., Clark Oil & Refining Corp./

Kickapoo Oil Co., Inc.

Date of Filing: August 10, 1992

Case Number: RF342-284

This Decision and Order considers an Application for Refund submitted by Kickapoo Oil Co., Inc. (Kickapoo) for a portion of the $11,379,351, plus accrued interest, which AOC Acquisition Corp. (AOC) remitted to the Department of Energy (DOE) under the terms of a 1988 settlement agreement. The Settlement Agreement resolved DOE allegations that Clark Oil & Refining Corp. (Clark) had violated the Mandatory Petroleum Price and Allocation Regulations in its sales of refined petroleum products during the period August 19, 1973 through January 27, 1981, the period covered by the settlement agreement.(1) For the reasons discussed below, we have determined that Kickapoo’s Application should be denied.

I. Background

A. The Apex/Clark Proceeding

On August 20, 1991, the Office of Hearings and Appeals (OHA) issued a Decision and Order instituting special refund procedures for the distribution of the settlement fund. See Apex Oil Co., 21 DOE ¶ 85,341 (1991) (hereinafter Apex/Clark). In accordance with the goals of 10 C.F.R. Part 205, Subpart V, the Apex/Clark determination implemented a process for refunding portions of the settlement fund to purchasers of Clark refined petroleum products who demonstrate that they were injured as a result of Clark's alleged regulatory violations. In Apex/Clark, we adopted a presumption that the alleged Clark overcharges had been dispersed equally over all gallons of regulated petroleum products sold by the firm during the settlement agreement period. We stated that, in the absence of a demonstration of an actual overcharge, a claimant would be allocated a share of the settlement fund on a per gallon, or

"volumetric," basis. Under this volumetric refund presumption, a claimant's allocable share equals $0.0011 multiplied by the number of gallons of covered product that it purchased from Clark.(2)

In order to receive its full allocable share under the volumetric presumption, a claimant is also required to demonstrate that it was injured as a result of its Clark purchases; that is, that it did not pass through to its customers Clark's alleged overcharges. This showing will generally consist of two distinct elements. First, a reseller claimant will be required to show that it had "banks" of unrecouped increased product costs in excess of the refund claimed.(3) Second, because a showing of banked costs alone is not sufficient to establish injury, a claimant must provide evidence that market conditions precluded it from increasing its prices to pass through the additional costs associated with the alleged overcharges. Such a showing could consist of a demonstration that a firm suffered a competitive disadvantage as a result of its purchases from Clark. See Behm Family Corp. v. DOE, 903 F.2d 830 (Temp. Emer. Ct. App. 1990); National Helium Co./Atlantic Richfield Co., 11 DOE ¶ 85,257 (1984), aff'd sub nom. Atlantic Richfield Co. v. DOE, 618 F. Supp. 1199 (D. Del. 1985).

A reseller claimant whose allocable share of the refund pool exceeds $10,000, excluding interest, may receive a refund of either $10,000 or 40 percent of its allocable share, up to $50,000, whichever is larger, without submitting evidence of injury beyond documentation of the volume of Clark refined petroleum product it purchased during the refund period. The use of this presumption reflects our conviction that these larger, mid-level claimants were likely to have experienced some injury as a result of the alleged overcharges. Apex/Clark at 89,022.

The volumetric refund presumption, however, is rebuttable. If an individual claimant believes that it was injured by more than its volumetric share, it may elect to forego this presumption and file a refund application based upon a claim that it suffered an actual overcharge as a result of Clark's alleged violations. Apex/Clark, 21 DOE at 89,020-21 n. 2. In accordance with the standards which have been developed in other special refund proceedings, such a claim will be granted if the claimant makes a persuasive showing that it was "overcharged" by a specific amount, and that it absorbed those overcharges. See, e.g., Mobil Oil Corp./Atchison, Topeka and Santa Fe Railroad Co., 20 DOE ¶ 85,788 (1990); Mobil Oil Corp./Marine Corps Exchange Service, 17 DOE ¶ 85,714 (1988).

Kickapoo states in its application that it purchased a total of 11,261,707 gallons of gasoline from Clark during the period from September 1973 to July 1976. Based upon those purchases, the maximum volumetric refund that Kickapoo may receive is $12,388 (11,261,707 gallons multiplied by the volumetric factor of $0.0011 per gallon), plus accrued interest. Without submitting evidence of injury, Kickapoo would be eligible to receive a refund at the $10,000 mid-level presumption level. However, Kickapoo alleges in its refund application that it was injured by more than its volumetric share, and attempts to rebut the volumetric refund presumption in order to receive a refund of $598,743.

B. The Proposed Decision and Order

On September 11, 1995, the DOE issued a Proposed Decision and Order (PD&O) which tentatively determined that Kickapoo’s application should be denied, and allowed Kickapoo an opportunity to file a statement of objections to the PD&O. The PD&O is incorporated herein by reference and is attached as an appendix to this Decision and Order. Kickapoo filed its statement of objections on November 15, 1995. Opposition of Kickapoo Oil Company, Inc. to Proposed Decision and Order Denying Refund [hereinafter “Objections”].

II. Analysis

A. The Basis for Our Tentative Denial in the PD&O of Kickapoo’s Claim

In 1978, Kickapoo filed suit against Clark under section 210 of the Economic Stabilization Act of 1970 (ESA), which allowed purchasers of regulated petroleum products to bring private actions for the recovery of overcharges in violation of the pricing regulations. Section 210 actions were filed in the federal district courts, the decisions of which could be appealed to the Temporary Emergency Court of Appeals (TECA). In Kickapoo’s case, the district court dismissed the action at the close of the presentation of the plaintiff’s evidence. In dismissing the case, the court found that Kickapoo had not presented sufficient evidence “to support the plaintiff’s contention that it was the subject of improper overcharges . . . .” Kickapoo v. Clark Oil & Refining Corp., 788 F.2d 11, 17 (Temp. Emer. Ct. App. 1985). Kickapoo appealed the decision to TECA, which affirmed the judgement of the district court. Id. at 21.

In prior cases, we have considered the effect of the disposition of a prior 210 action on a application for refund. In an opinion upholding a determination by the OHA denying an application in the Exxon refund proceeding, where the applicant had previously settled a section 210 action with Exxon, the U.S. District Court for the District of Columbia stated that “a final judgment, whether arrived at by way of a settlement agreement or an adjudication on the merits, does extinguish a party’s claim to remedies pertaining to ?all or any part of the transaction, or series of connected transactions, out of which the action arose.’” Hydrocarbon Trading & Transp. Co., Inc. v. Department of Energy, No. 93-841, (D.D.C. May 9, 1995) at 11 (quoting Restatement (Second) of Judgments § 24 (1982)).(4)

Although Kickapoo’s present claim is based on the same series of transactions out of which its failed private action arose, the applicant contends that it should nonetheless receive a refund in this proceeding. Kickapoo states that it did not prevail in its section 210 action “[b]ecause of adverse procedural and evidentiary rulings by the district court,” the primary reason being that “the district court disallowed testimony by Kickapoo’s expert, Peter Johnson, because Kickapoo failed to supplement its discovery to inform Clark of its overcharge methodology to be presented by Mr. Johnson until a few days before trial.” Application at 5. The applicant contends it should now be awarded $598,743 because “sufficient evidence was obtained during discovery in the lawsuit to enable Kickapoo to present the requisite non-spurious demonstration that it was specifically and measurably overcharged by Clark.” Id. at 5-6.

Under the general rule of bar, a “valid and final personal judgment rendered in favor of the defendant bars another action by the plaintiff on the same claim.” Restatement (Second) of Judgments § 19 (1982). We noted in the PD&O that the considerations underlying this rule apply “especially if the plaintiff has failed to avail himself of opportunities to pursue his remedies in the first proceeding,” Id. at comment a. Kickapoo clearly had the opportunity to marshal its evidence at the trial of its section 210 action, and failed to do so. Accordingly, following the holding of the court in Hydrocarbon, we found in the PD&O that the applicant is precluded by the doctrine of res judicata from relitigating its claims in this proceeding. See also SunBehm Gas, Inc. v. Department of Energy, No. 93-0572 (D.D.C. Mar. 7, 1994) (plaintiff “does not get a second bite at the apple” in the Subpart V refund proceeding in order to submit new evidence of injury), aff’d per curiam, 43 F.3d 1486 (D.C. Cir. 1994). Kickapoo objects to our PD&O on a number of grounds, which we address in turn below.

B. Kickapoo’s Objections to the PD&O

1. The “Dual Enforcement Mechanism” of the ESA

The applicant argues that “the dual enforcement mechanism established by Congress in the [ESA] mandates that a refund application not be rejected on the basis that the applicant had received a judgment” in a section 210 action, but rather “that the claim merely be reduced by the amount of recovery in the judicial proceeding. This Congressional mandate is recognized not only by OHA’s own precedent but also by the precedent of the federal courts, including [TECA].” Objections at 4.

Kickapoo contends that we recognized this “Congressional mandate” in our decision in Office of Enforcement, 9 DOE ¶ 82,508 (1981) (National Helium). In National Helium, a decision ordering the implementation of a Subpart V refund proceeding, we considered a proposal to require each refund applicant in that proceeding to waive its right to file a section 210 action as a condition precedent to receipt of any refund. We noted that in a prior Subpart V implementation decision, Office of Enforcement, 8 DOE ¶ 82,597 (1981) (Vickers), we adopted a similar election of remedies (or waiver) provision because we believed it would “encourage settlements between DOE and regulated firms” and because the Office of Enforcement (OE) agreed in the underlying consent order to request that we adopt such a provision. Id. at 85,394-95. Nonetheless, we rejected the proposal in National Helium because, “[i]n contrast to the Vickers case, none of the consent orders underlying this proceeding contains a provision that OE will recommend a waiver requirement.” National Helium at 85,054.

As Kickapoo points out, we also noted in National Helium that “Congress expressly set a policy of permitting double exposure to liability by providing in §§ 209 and 210 of the ESA that a firm be subject to suit by both the government and by private firms” and that we “would certainly reduce (“set-off”) any firm’s recovery in one proceeding by any amount already recovered in another proceeding.” However, Kickapoo’s interpretation of our decision is wrong. Objections at 4. It is clear that National Helium did not recognize a “Congressional mandate to allow duel avenues of recovery under the ESA, subject only to set-off to avoid double recovery.” Id. Indeed, we affirmed that under certain circumstances, such as those present in Vickers, it was both permissible under the ESA and desirable to require Subpart V applicants to waive the right to file a section 210 action.

The applicant also cites for support several decisions of the federal courts, including Bulzan v. ARCO, 620 F.2d 278 (Temp. Emer. Ct. App. 1980). In Bulzan, TECA found that even where the plaintiff had obtained prior administrative relief, any such relief “was ?plainly inadequate’ as a substitute for the complainant’s private rights under section 210.” Id. (quoting Evanson v. Union Oil Co. of Cal., 5 CCH Energy Management ¶ 26,056 (D.Minn. 1976)). The court focused on the “different administrative and private remedies,” specifically on the fact that a section 210 action was “potentially more lucrative” because of the availability of an award of treble damages. Id. By contrast, the court found that

the administrative remedies authorized by the ESA are not designed to provide a redress for a victim who has suffered an injury because of a violation of a FEA or DOE regulation; in other words, in contrast to private remedies, administrative remedies are not concerned either with punishing a violator for his illegal conduct or with compensating a victim for his injuries. Rather, the purpose of administrative remedies ". . . is to insure, on a national scale, the enforcement of (the DOE's administrative) regulations."

Id. at 282 (quoting Economic Regulatory Enforcement Manual, § 1.501.00). In other words, the court saw restitution in a public action as merely a by-product of the enforcement of the regulations, as opposed to the more direct and “more lucrative” route to restitution via a private section 210 action. Thus, TECA concluded that barring the plaintiff from pursuing a separate action under section 210 would both deprive the plaintiff of adequate relief and lead other aggrieved parties to “file their private actions without notifying the DOE of their complaints,” thereby placing “a substantial burden on the federal courts, and . . . significantly detract[ing] from the effectiveness of the administrative process that Congress incorporated into its regulatory plan.” Id. at 281.

The case now before us is the factual converse of Bulzan. It presents none of the concerns then cited by the TECA as bases for its “hold[ing] that the entry of the remedial order by the FEA did not bar plaintiff's right to institute a private action for damages and injunctive relief pursuant to section 210 of ESA.” Id. at 284. Applying res judicata in the present case obviously does not deny Kickapoo its undisputed right to pursue a “potentially more lucrative” section 210 action, which Kickapoo already pursued, and lost. Nor does it “significantly detract” from the administrative enforcement of regulations, since those regulations ceased to be effective prior to the enactment of the PODRA and the implementation of the present proceeding.(5) Thus, there is little or no support for Kickapoo’s broad claim that a double-edged enforcement mechanism must be maintained and furthered by offering unsuccessful section 210 litigants a new opportunity for recovery.

2. The Impact on Indirect Restitution

In the PD&O, we noted that under the PODRA, any funds that remain after providing direct restitution to injured parties are to be used for indirect restitution through the states. 42 U.S.C. § 4502(d). Thus, we said that if a refund were to be paid to Kickapoo from the Clark escrow fund, it would come at the expense of those injured non-claimants designated by the PODRA to receive indirect restitution. Denny Klepper Oil Co. v. DOE, 598 F. Supp. 522, 527 n. 11 (D.D.C. 1984). We concluded that it would be manifestly unfair to divert restitutionary funds from those parties that have not litigated their claims to a party that already had an opportunity to prove its claims, and failed.

In its objections, the applicant contends that “PODRA explicitly states that making direct restitution to injured parties shall be OHA’s ?primary consideration,’” and that the “OHA is required to provide direct restitution ?to the maximum extent possible.’” Objections at 6-7 (quoting 42 U.S.C. § 4502(b), (c)). Thus, according to the applicant, “regardless of whether OHA believes that state governments are more worthy of receiving overcharge funds than is a private party such as Kickapoo, Congress mandated in PODRA that OHA may not consider such distributive ?fairness’ between direct and indirect restitution.” Objections at 8.

Unfortunately, the applicant’s arguments mischaracterize the statutory language of the PODRA, and ignore the clear intent of Congress in enacting the statute to effect both direct and indirect restitution. First, the PODRA does not make the explicit statement described by the applicant. The statute provides that, in determining the amount of money available for indirect restitution, “the Secretary shall give primary consideration to assuring that at all times sufficient funds (including a reasonable reserve) are set aside for making such [direct] restitution and meeting such other commitments.” 42 U.S.C. § 4502(c). It is clear from this portion of the statute that Congress wanted to make certain that sufficient funds would be kept in reserve to provide for direct restitution. It is equally clear, however, that the quoted passage reveals no Congressional intent regarding what the OHA may or may not consider in determining whether direct restitution is warranted in a given case.

There is no question, as the applicant points out, that the PODRA specifies the mechanism for making indirect restitution from monies that are “in excess” of the amount needed for direct restitution. Objections at 7 (quoting 42 U.S.C. § 4502(c)). We disagree, however, with a reading of the statute that trivializes Congress’ express intent to provide indirect restitution where possible. For example, Kickapoo’s implication that our decision reflects a belief “that state governments are more worthy of receiving overcharge funds than is a private party such as Kickapoo” is incorrect. It ignores the fact that the state governments are merely conduits through which restitution is made, albeit indirectly, to injured parties. The portion of our PD&O to which the applicant objects simply recognizes this fact.

3. The Exxon/Hydrocarbon Decision

The applicant argues that our decision in Exxon Corp./Hydrocarbon Trading & Transport Co., Inc., 22 DOE ¶ 85,140 (1992), which was upheld by the U.S. District Court for the District of Columbia in Hydrocarbon, is “completely inapposite” to the case before us. Objections at 9. In Exxon/Hydrocarbon, we considered the application of a company that had entered into a settlement agreement with Exxon in 1984, by which it agreed to dismiss a section 210 action against Exxon and to request the dismissal of an administrative proceeding that the DOE had begun against Exxon. Underlying the Exxon refund proceeding was a 1986 Consent Order between the DOE and Exxon resolving all "pending and potential civil and administrative claims" against Exxon. Because of the applicant’s 1984 settlement agreement with Exxon, we found that the applicant had no pending or potential civil or administrative claims against Exxon at the time of the 1986 Consent Order. Thus, the applicant’s refund claim necessarily fell outside the scope of the Exxon Consent Order, no refund was appropriate, and its application for refund was denied.

Kickapoo is correct that the circumstances in the present case are quite different from those in Exxon/Hydrocarbon, and that the rationale of our decision in that case is different from that set forth in the PD&O. However, contrary to the applicant’s assertion, we did not cite Exxon/Hydrocarbon as support for our tentative decision in this case. Rather, we cited in the PD&O the opinion of the U.S. District Court upholding our Exxon/Hydrocarbon decision, and did so because the court there articulated as a basis for its decision the more general rule of bar, a rule that applies equally well to the present case.

4. The Apex, Clark/Go-Tane Decision

Kickapoo contends in its objections that the PD&O is inconsistent with our decision in Apex Oil Co., Clark Oil & Ref. Corp./Go-Tane Service Stations, Inc., 27 DOE ¶ 85,006 (1998). Objections at 11-12. In Apex, Clark/Go-Tane, the applicant had filed a section 210 overcharge claim against Clark. Go-Tane was able to convince the district court in its private action that it suffered $279,667 in damages resulting from Clark’s overcharges. However, solely due to the operation of the Illinois statute of limitations, the damage award was reversed on appeal. In discussing the application of the holding of the court in Hydrocarbon to that case, we noted that the Restatement of Judgments, upon which the Hydrocarbon court relied, provided an exception to the bar against any further claim to damages where “[t]he judgment in the first action was plainly inconsistent with the fair and equitable implementation of a statutory or constitutional scheme, or it is the sense of the scheme that the plaintiff should be permitted to split his claim”. Restatement (Second) of Judgments § 26 (1982). Accordingly, consistent with the fair and equitable implementation of the statutory scheme set forth in the PODRA, we afforded Go-Tane an opportunity to reassert its overcharge claim in the Clark proceeding. Apex, Clark/Go-Tane at 88,030-31.

The applicant contends that the “PD&O rejecting Kickapoo’s application involves facts that are virtually indistinguishable from Clark/Go-Tane.” Objections at 12. We could not disagree more. Kickapoo was afforded a full and fair opportunity to present its section 210 claim to a trial court, that court dismissed the action at close of plaintiff’s case for lack of sufficient evidence “to support the plaintiff’s contention that it was the subject of improper overcharges,” and the court’s judgement was affirmed by TECA on appeal. Kickapoo v. Clark Oil & Refining Corp., 788 F.2d 11, 17, 21 (Temp. Emer. Ct. App. 1985). By contrast, Go-Tane’s otherwise meritorious section 210 overcharge claim was dismissed solely due to the statute of limitations. Thus, the two sets of facts are far from “virtually indistinguishable” and the distinction clearly justifies the result in each case.(6) Indeed, we drew this same distinction in the Apex, Clark/Go-Tane decision. Unlike in the case of Go-Tane’s section 210 overcharge claim, the district court’s ruling on the merits of Go-Tane’s allocation claim was not reversed on statute of limitations grounds, and we therefore denied Go-Tane’s Subpart V allocation claim for the same reason we find the present claim by Kickapoo should be denied. Apex, Clark/Go- Tane at 88,040-44.

5. Application of the Doctrine of Res Judicata

Kickapoo further argues that we misapply the doctrine of res judicata to its claim, and specifically takes issue with our reliance on section 19 of the Restatement of Judgments, which states that a “valid and final personal judgment rendered in favor of the defendant bars another action by the plaintiff on the same claim.” Restatement (Second) of Judgments § 19 (1982).

The applicant asserts that the doctrine as set forth in the Restatement does not apply because “Kickapoo does not request a second personal judgment against Clark, but rather requests a refund from the Clark Subpart V escrow fund.” Objections at 12-13. Kickapoo quotes from a comment to section 19 of the Restatement that “[t]he rule that a defendant’s judgment acts a bar to a second action on the same claim is based largely on the ground that fairness to the defendant, and sound judicial administration, require that at some point litigation over the particular controversy come to an end.” Restatement (Second) of Judgments § 19 comment a (1992). Kickapoo reasons that

[b]ecause Clark is not a party to this refund proceeding, the concern of fairness to the defendant in the first action is not applicable here. Application of the doctrine of res judicata generally requires that the parties in the first and second action be identical, see Nevada v. United States, 463 U.S. 110, 143 (1983), because the doctrine is largely designed to protect defendants from the burden of duplicative litigations.

In applying the res judicata doctrine in Nevada, the Supreme Court had to “decide whether the parties in the instant proceeding are identical to or in privity with the parties in” an earlier proceeding. Nevada, 463 U.S. at 130. The Court explained that it was attempting to determine “which of the parties before us are bound by the earlier decree. As stated earlier, the general rule is that a prior judgment will bar the ?parties’ to the earlier lawsuit, ?and those in privity with them,’ from relitigating the cause of action.” Id. at 135 (quoting Cromwell v. County of Sac, 94 U.S. 351, 352 (1876)). Conversely, nonparties to an earlier action are normally not bound by the judgment in the prior case. However, Kickapoo, the only party in the present case, obviously was a party in its section 210 action against Clark. It is therefore consistent with the doctrine of res judicata, and the rationale underlying the doctrine, to bar it from relitigating the cause of action here.

More directly relevant to the applicant’s argument is an earlier decision of the Supreme Court finding that res judicata may apply even in the absence of the defendant to the first action, thus departing from the doctrine of “mutuality of estoppel.” Blonder-Tongue Laboratories, Inc. v. Univ. of Illinois Found., 402 U.S. 313 (1971). As the court there observed,

Authorities differ on whether the public interest in efficient judicial administration is a sufficient ground in and of itself for abandoning mutuality, but it is clear that more than crowded dockets is involved. The broader question is whether it is any longer tenable to afford a litigant more than one full and fair opportunity for judicial resolution of the same issue.

Id. at 328-29. Thus, as we note above, the fact that Kickapoo had “one full and fair opportunity for judicial resolution” of its claim reinforces the basis for our application of res judicata in this case.

Moreover, we note that for all practical purposes, the DOE stands in the shoes of Clark in this Subpart V refund proceeding. If we were to approve Kickapoo’s allocation claim against the Clark consent order fund, we would order that money remitted by Clark be disbursed to Kickapoo. Albeit somewhat indirectly, we would be providing to the section 210 plaintiff Kickapoo a remedy against the section 210 defendant Clark, despite the fact that all rights of Kickapoo to such a remedy were extinguished by the final judgment in the section 210 action.

Finally, Kickapoo argues that “res judicata does not bar an unsuccessful Section 210 litigant from receiving a subsequent Subpart V refund because different standards of proof are applicable to the two types of proceedings.” Objections at 14. We agree with Kickapoo generally that res judicata should not apply in a subsequent proceeding where the standard of proof is less stringent than that in the first case. Nonetheless, we reject Kickapoo’s argument that this principle applies in the present case.

The applicant reasons that a “private civil action requires the plaintiff to demonstrate his or her claim by a preponderance of the evidence. Subpart V refund applications, on the other hand, do not require proof by a preponderance of the evidence. Rather, one need only present a ?non-spurious’ demonstration of overcharge and injury therefrom.” Id. Kickapoo is incorrect. Its argument rests on the erroneous assumption that a claimant can demonstrate that its claim is “non-spurious” based on something less than the preponderance of the evidence, i.e. despite a greater weight of evidence that the claim is in fact spurious. In fact, preponderance of the evidence is the proper standard in a refund claim determination.

As TECA has noted, in prior cases we have stated that a “?non-spurious’ claim [i]s one where that claimant ha[s] made a ?reasonable demonstration’” of a regulatory violation. Research Fuels, Inc., 977 F.2d at 603 (quoting Marathon Petroleum Co./Research Fuels, Inc. 19 DOE ¶ 85,575 at 89,050 (1989)). We have never quantified the amount of evidence necessary to make such a demonstration, but we certainly would not grant a refund claim if the preponderance of the evidence before us indicated that the claim was without merit. Such was the posture of the applicant in its private action, which was dismissed, after Kickapoo had presented its case, for lack of evidence “to support the plaintiff’s contention that it was the subject of improper overcharges . . . .” Kickapoo v. Clark Oil & Refining Corp., 788 F.2d 11, 17 (Temp. Emer. Ct. App. 1985). We will therefore not revisit the findings of the district court in Kickapoo’s section 210 action and the resulting judgment which was affirmed by TECA on appeal. Id. at 21.

After carefully considering the applicant’s objections to our Proposed Decision and Order, we conclude for the reasons set forth above that Kickapoo’s refund claim should be denied.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Kickapoo Oil Co., Inc., Case No. RF342-284, is hereby denied.

(2) This is a final Order of the Department of Energy.

George B. Breznay

Director

Office of Hearings and Appeals

Date:October 13, 1998

(1)In 1981, Apex Oil Company (Apex) acquired the Clark Oil & Refining Corporation (Clark) through its wholly-owned subsidiary, Apex Holding Company, a Missouri Corporation. AOC, the one-time successor to Apex, was the entity that actually agreed to the settlement with the DOE. Separate provision was made in Apex/Clark for the distribution of the crude oil portion of the AOC settlement fund. See Apex Oil Co., 21 DOE ¶ 85,341 at 89,017-20 (1991).

(2)Apex/Clark at 89,021. We derived this figure by dividing the refined product portion of the settlement fund, $11,379,351, by 10,506,641,585 gallons, the volume of covered refined products which Clark sold from August 19, 1973 through the date of decontrol of the various products.

(3)Claimants who have previously relied upon their banked costs in order to obtain refunds in other special refund proceedings should subtract those refunds from any cost banks submitted in this refund proceeding. See Husky Oil Co./Metro Oil Products, Inc., 16 DOE ¶ 85,090 at 88,179 (1987). Additionally, a claimant attempting to show injury may not receive a refund for any month in which it has a negative accumulated cost bank (for the petroleum product) or for any prior month. See Standard Oil Co. (Indiana)/Suburban Propane Gas Corp., 13 DOE ¶ 85,030 at 88,082 (1985). If a claimant no longer has records showing its banked costs, the OHA may use its discretion to permit the claimant to approximate those cost banks. See, e.g., Gulf Oil Corp./Sturdy Oil Co., 15 DOE ¶ 85,187 (1986).

(4)The district court’s dismissal of Kickapoo’s section 210 action was an “adjudication on the merits.” See Kickapoo, 788 F.2d at 17 n.3 (“the court in effect granted an involuntary dismissal under Fed.R.Civ.P. 41(b)”); Fed R. Civ. P. 41(b) (“Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication upon the merits.”).

(5)The other federal court cases cited by the applicant echo the holding of Bulzan, with which we agree, that “the DOE's administrative enforcement action does not affect the . . . right to file and maintain a private cause of action under § 210.” Van Vranken v. Atlantic Richfield Co., 699 F. Supp. 1420, 1428 (N.D. Cal. 1988); see U.S. Oil Co. v. Koch Refining Co., 518 F. Supp 957, 961 (E.D. Wisc. 1981) (“Supplementing DOE's enforcement powers with the private cause of action increases the likelihood that the statute would be obeyed and enforced.”); City of Long Beach v. Department of Energy, 754 F.2d 379, 389-90 (Temp. Emer. Ct. App. 1985); In re The Department of Energy Stripper Well Exemption Litigation, 578 F. Supp. 586, 594 (D. Kan. 1984). These cases also address the need to offset recovery in section 210 actions to account for amounts already paid by the defendant in order to avoid the defendant’s double liability.

(6)See C. Wright & A. Miller, Federal Practice and Procedure § 4441 (1981) (“Dismissal of a prior action as barred by a statute of limitations creates a variety of preclusion problems. The problems that depend solely on the theories of limitations and preclusion arise when the second action is brought in the same system of courts. In this setting, it is clear that preclusion applies so long as the second action is brought on the same claim. . . . No more difficulty need be presented by an action on the same claim if the second forum would decide independently to apply the same statute of limitations as led to the first dismissal. If the second forum would decide independently to apply a longer period of limitations, on the other hand, the traditional rule has been that it is free to proceed with the second action.”)

Case No. RF342-00284

PROPOSED

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Petitioner: Apex Oil Co., Clark Oil & Refining Corp./Kickapoo Oil Co., Inc.

Date of Filing: August 10, 1992

Case Number: RF342-284

This Proposed Decision and Order considers an Application for Refund submitted by Kickapoo Oil Co., Inc. (Kickapoo) for a portion of the $11,379,351, plus accrued interest, which AOC Acquisition Corp. (AOC) remitted to the Department of Energy (DOE) under the terms of a 1988 settlement agreement. The Settlement Agreement resolved DOE allegations that Clark Oil & Refining Corp. (Clark) had violated the Mandatory Petroleum Price and Allocation Regulations in its sales of refined petroleum products during the period August 19, 1973 through January 27, 1981, the period covered by the settlement agreement.(1)

We have tentatively determined that Kickapoo’s Application should be denied. As discussed below, Kickapoo shall have 30 days from the date of this Proposed Decision and Order to file an objection for the purposes of providing additional evidence in support of its claim.

I. Background

A. The Apex/Clark Proceeding

On August 20, 1991, the Office of Hearings and Appeals (OHA) issued a Decision and Order instituting special refund procedures for the distribution of the settlement fund. See Apex Oil Co., 21 DOE ¶ 85,341 (1991) (hereinafter Apex/Clark). In accordance with the goals of 10 C.F.R. Part 205, Subpart V, the Apex/Clark determination implemented a process for refunding portions of the settlement fund to purchasers of Clark refined petroleum products who demonstrate that they were injured as a result of Clark's alleged regulatory violations. In Apex/Clark, we adopted a presumption

that the alleged Clark overcharges had been dispersed equally over all gallons of regulated petroleum products sold by the firm during the settlement agreement period. We stated that, in the absence of a demonstration of an actual overcharge, a claimant would be allocated a share of the settlement fund on a per gallon, or "volumetric," basis. Under this volumetric refund presumption, a claimant's allocable share equals $0.0011 multiplied by the number of gallons of covered product that it purchased from Clark.(2)

In order to receive its full allocable share under the volumetric presumption, a claimant is also required to demonstrate that it was injured as a result of its Clark purchases; that is, that it did not pass through to its customers Clark's alleged overcharges. This showing will generally consist of two distinct elements. First, a reseller claimant will be required to show that it had "banks" of unrecouped increased product costs in excess of the refund claimed.(3) Second, because a showing of banked costs alone is not sufficient to establish injury, a claimant must provide evidence that market conditions precluded it from increasing its prices to pass through the additional costs associated with the alleged overcharges. Such a showing could consist of a demonstration that a firm suffered a competitive disadvantage as a result of its purchases from Clark. See Behm Family Corp. v. DOE, 903 F.2d 830 (Temp. Emer. Ct. App. 1990); National Helium Co./Atlantic Richfield Co., 11 DOE ¶ 85,257 (1984), aff'd sub nom. Atlantic Richfield Co. v. DOE, 618 F. Supp. 1199 (D. Del. 1985).

A reseller claimant whose allocable share of the refund pool exceeds $10,000, excluding interest, may receive a refund of either $10,000 or 40 percent of its allocable share, up to $50,000, whichever is larger, without submitting evidence of injury beyond documentation of the volume of Clark refined petroleum product it purchased during the refund period. The use of this presumption reflects our conviction that these larger, mid-level claimants were likely to have experienced some injury as a result of the alleged overcharges. Apex/Clark at 89,022.

The volumetric refund presumption, however, is rebuttable. If an individual claimant believes that it was injured by more than its volumetric share, it may elect to forego this presumption and file a refund application based upon a claim that it suffered an actual overcharge as a result of Clark's alleged violations. Apex/Clark, 21 DOE at 89,020-21 n. 2. In accordance with the standards which have been developed in other special refund proceedings, such a claim will be granted if the claimant makes a persuasive showing that it was "overcharged" by a specific amount, and that it absorbed those overcharges. See, e.g., Mobil Oil Corp./Atchison, Topeka and Santa Fe Railroad Co., 20 DOE ¶ 85,788 (1990); Mobil Oil Corp./Marine Corps Exchange Service, 17 DOE ¶ 85,714 (1988).

Kickapoo states in its application that it purchased a total of 11,261,707 gallons of gasoline from Clark during the period from September 1973 to July 1976. Based upon those purchases, the maximum volumetric refund that Kickapoo may receive is $12,388 (11,261,707 gallons multiplied by the volumetric factor of $0.0011 per gallon), plus accrued interest. Without submitting evidence of injury, Kickapoo would be eligible to receive a refund at the $10,000 mid-level presumption level. However, Kickapoo alleges in its refund application that it was injured by more than its volumetric share, and attempts to rebut the volumetric refund presumption in order to receive a refund of $598,743.

B. The Mandatory Petroleum Price Regulations

Before we analyze Kickapoo's request for an above-volumetric refund, some background will be helpful. Under the Mandatory Petroleum Price Regulations that were in effect from August 19, 1973 through January 27, 1981, refiners, such as Clark, were required to establish prices for covered products in accordance with the provisions of 10 C.F.R. Part 212, Subpart E, and the predecessor Cost of Living Council Phase IV regulations at 6 C.F.R. Part 150, Subpart L. Those regulations required that a refiner sell each covered product at a price that did not exceed the maximum allowable price ("MAP") for that product, a price equaling the base price established for the product plus certain allowable increased non-product costs. The refiner's base price for the product sold to a class of purchaser was defined as the weighted average price at which the product was sold to that class on May 15, 1973 (hereinafter "May 15, 1973 price") plus the refiner's increased product costs incurred between May 1973 and the month of measurement. 10 C.F.R. § 212.82(b).(4)

II. Kickapoo's Application for Refund

Kickapoo, a gasoline retailer and purchaser of gasoline from Clark during the settlement agreement period, claims that it was overcharged by Clark in its purchases of gasoline from Clark terminals located in Granville and Green Bay, Wisconsin. According to the applicant, Clark overcharged Kickapoo by calculating its MAPs using the prices at which the products were sold on August 20, 1973, rather than by using the May 15, 1973 price as required by the regulations. Because at each of its terminals Clark's August 20 price was six to seven cents higher than its May 15 price, Kickapoo contends than Clark's use of the August 20 price resulted in overcharges to Kickapoo equal to the difference between the August 20 and May 15 prices. By multiplying the number of gallons of gasoline purchased by Kickapoo at each terminal by the difference between the August 20 and May 15 prices at that terminal, Kickapoo concludes that it incurred overcharges totaling $712,786.

III. Analysis

In 1978, Kickapoo filed suit against Clark under § 210 of the Economic Stabilization Act of 1970, which allowed purchasers of regulated petroleum products to bring private actions for the recovery of overcharges in violation of the pricing regulations. Section 210 actions were filed in the federal district courts, the decisions of which could be appealed to the Temporary Emergency Court of Appeals (TECA). In Kickapoo’s case, the district court dismissed the action at the close of the presentation of the plaintiff’s evidence. In dismissing the case, the court found that Kickapoo had not presented sufficient evidence “to support the plaintiff’s contention that it was the subject of improper overcharges . . . .” Kickapoo v. Clark Oil & Refining Corp., 788 F.2d 11, 17 (Temp. Emer. Ct. App. 1985). Kickapoo appealed the decision to TECA, which affirmed the judgement of the district court. Id. at 21.

In a recent opinion upholding a determination by the OHA denying an application in the Exxon refund proceeding, where the applicant had previously settled a § 210 action with Exxon, the U.S. District Court for the District of Columbia stated that “a final judgment, whether arrived at by way of a settlement agreement or an adjudication on the merits, does extinguish a party’s claim to remedies pertaining to ?all or any part of the transaction, or series of connected transactions, out of which the action arose.’” Hydrocarbon Trading & Transp. Co., Inc. v. Department of Energy, No. 93-841, (D.D.C. May 9, 1995) at 11 (quoting Restatement (Second) of Judgments § 24 (1982)).(5)

Although Kickapoo’s present claim is based on the same series of transactions out of which its failed private action arose, the applicant contends that it should nonetheless receive a refund in this proceeding. Kickapoo states that it did not prevail in its § 210 action “[because of adverse procedural and evidentiary rulings by the district court,” the primary reason being that “the district court disallowed testimony by Kickapoo’s expert, Peter Johnson, because Kickapoo failed to supplement its discovery to inform Clark of its overcharge methodology to be presented by Mr. Johnson until a few days before trial.” Application at 5. The applicant contends it should now be awarded $598,743 because “sufficient evidence was obtained during discovery in the lawsuit to enable Kickapoo to present the requisite non-spurious demonstration that it was specifically and measurably overcharged by Clark.” Id. at 5-6. We disagree.

Under the general rule of bar, a “valid and final personal judgment rendered in favor of the defendant bars another action by the plaintiff on the same claim.” Restatement (Second) of Judgments § 19 (1982). The considerations underlying this rule apply “especially if the plaintiff has failed to avail himself of opportunities to pursue his remedies in the first proceeding.” Id. at comment a. Clearly, Kickapoo had the opportunity to marshal its evidence at trial, and failed to do so. That fact only further supports our decision to not revisit the judgment of the district court in Kickapoo’s § 210 action, which was affirmed by TECA on appeal. See SunBehm Gas, Inc. v. Department of Energy, No. 93-0572 (D.D.C. Mar. 7, 1994) (plaintiff “does not get a second bite at the apple” in the Subpart V refund proceeding in order to submit new evidence of injury), aff’d per curiam, 43 F.3d 1486 (D.C. Cir. 1994). Accordingly, the applicant is precluded by the doctrine of res judicata from relitigating its claims in this proceeding.

Moreover, providing a remedy to a party that has sustained no regulatory injury would be contrary to the restitutionary policy of the OHA grounded in the PODRA. Under the statutory scheme, any funds that remain after direct restitution to injured parties are to be used for indirect restitution through the states. Thus, any refund paid to Kickapoo from the Clark escrow fund would come at the expense of those injured non-claimants designated by the PODRA to receive indirect restitution. Denny Klepper Oil Co. v. DOE, 598 F. Supp. 522, 527 n. 11 (D.D.C. 1984). It would be manifestly unfair to divert restitutionary funds from those parties that have not litigated their claims to a party that already had an opportunity to prove its claims, and failed. For the foregoing reasons, we will tentatively deny Kickapoo’s refund claim.

As stated above, Kickapoo shall have 30 days from the date of this Proposed Decision and Order to file an objection. In the absence of an objection, Kickapoo’s refund claim will be denied.

It Is Therefore Ordered That:

The Application for Refund filed by Kickapoo Oil Co., Inc., Case No. RF342-284, is hereby denied.

(1)In 1981, Apex Oil Company (Apex) acquired the Clark Oil & Refining Corporation (Clark) through its wholly-owned subsidiary, Apex Holding Company, a Missouri Corporation. AOC, the one-time successor to Apex, was the entity that actually agreed to the settlement with the DOE. Separate provision was made in Apex/Clark for the distribution of the crude oil portion of the AOC settlement fund. See Apex Oil Co., 21 DOE ¶ 85,341 at 89,017-20 (1991).

(2)Apex/Clark at 89,021. We derived this figure by dividing the refined product portion of the settlement fund, $11,379,351, by 10,506,641,585 gallons, the volume of covered refined products which Clark sold from August 19, 1973 through the date of decontrol of the various products.

(3)Claimants who have previously relied upon their banked costs in order to obtain refunds in other special refund proceedings should subtract those refunds from any cost banks submitted in this refund proceeding. See Husky Oil Co./Metro Oil Products, Inc., 16 DOE ¶ 85,090 at 88,179 (1987). Additionally, a claimant attempting to show injury may not receive a refund for any month in which it has a negative accumulated cost bank (for the petroleum product) or for any prior month. See Standard Oil Co. (Indiana)/Suburban Propane Gas Corp., 13 DOE ¶ 85,030 at 88,082 (1985). If a claimant no longer has records showing its banked costs, the OHA may use its discretion to permit the claimant to approximate those cost banks. See, e.g., Gulf Oil Corp./Sturdy Oil Co., 15 DOE ¶ 85,187 (1986).

(4)"Class of purchaser" was defined in 10 C.F.R. § 212.31 as "purchasers to whom a person has charged a comparable price for a comparable property or service pursuant to customary price differentials between those purchasers and other purchasers."

(5)The district court’s dismissal of Kickapoo’s § 210 action was an “adjudication on the merits.” See Kickapoo, 788 F.2d at 17 n.3 (“the court in effect granted an involuntary dismissal under Fed.R.Civ.P. 41(b)”); Fed R. Civ. P. 41(b) (“Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication upon the merits.”).