Ricky Hasbrouck and 11 other plaintiffs were Texaco retail service station dealers in the Spokane area. They purchased gasoline directly from Texaco and resold it at retail under the Texaco trademark. Throughout the relevant time period (1972–1981), Texaco also supplied gasoline to two gasoline distributors, Dompier Oil Company and Gull Oil Company, at a price that was at various times between 2.5 cents and 5.75 cents per gallon lower than the price Hasbrouck paid. Dompier and Gull sold the gasoline they purchased from Texaco to independent retail service stations. Dompier sold the gasoline to retailers under the Texaco trademark; Gull marketed it under private brand names. Gull’s customers either sold their gasoline on consignment (in which case they set their own prices) or on commission (in which case Gull set their resale prices). Gull retained title until the gas was sold to a retail customer in either case. Some of the retail stations supplied by Dompier were owned and operated by Dompier’s salaried employees. Both Dompier and Gull picked up gas at the Texaco bulk plant and delivered it to their retail customers, a service for which Dompier was compensated by Texaco at the common carrier rate. 

Hasbrouck and the other dealers filed a price discrimination suit against Texaco under § 2(a) of the Robinson–Patman Act. At trial, Texaco argued that its lower prices to Gull and Dompier were lawful functional discounts. The jury awarded the plaintiffs $1,349,700 in treble damages. When the Ninth Circuit Court of Appeals affirmed the jury award, Texaco appealed. The U.S. Supreme Court granted certiorari. How did the Supreme Court rule? Were the particular functional discounts provided by Texaco lawful?