Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—W.D. Mo.: Missouri Merchandising Practices Act claim against gasoline station operators preempted by Petroleum Marketing Practices Act, (Apr 1, 2014)

By Linda O’Brien, J.D., LL.M.

The federal Petroleum Marketing Practices Act expressly and impliedly preempted a claim against gasoline station operators over alleged false advertising and misrepresentation of gasoline octane grades under the Missouri Merchandising Practices Act, the federal district court in Kansas City has ruled (Johnson v. MFA Petroleum Company, March 28, 2014, Kays, G.).

Joyce Johnson brought suit on behalf of a putative class of gasoline consumers against gasoline station operators MFA Petroleum, Casey’s General Stores, and Quiktrip Corporation, alleging that the operators’ use of “single hose blender pumps” resulted in false advertising and misrepresentations concerning the grade of gasoline sold through the pumps. Single hose blender pumps dispense all grades of gasoline through a single hose. Johnson alleged that when a purchaser of premium gasoline used one of those pumps after a purchaser of a lower grade of gasoline, the premium purchaser would receive up to one half gallon of the lower grade remaining in the hose.

Johnson filed suit in state court, claiming the use of these pumps violated the Missouri Merchandising Practices Act (MMPA), which prohibits “deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce.” After removal to the federal district court, the suit was dismissed on the grounds that the federal Petroleum Marketing Practices Act (PMPA) completely preempted Johnson’s MMPA claim. In reversing the district court finding of complete preemption, the Eighth Circuit Court of Appeals distinguished between the doctrine of ordinary preemption and complete preemption. The operators subsequently moved for summary judgment.

Express preemption. The court found that the PMPA expressly preempts Johnson’s MMPA claim. The PMPA, which regulates the testing and disclosure of automotive fuel ratings, expressly preempts state law causes of action relating to octane disclosure and labeling requirements that are not identical to those in the PMPA. Although Johnson’s complaint did not use the term “octane” and only references grades and brands of gasoline, there was no meaningful difference between a gasoline’s grade or brand and its octane rating, the court noted. Moreover, from the totality of the allegations, the gravamen of Johnson’s complaint falls within the preempted area of attempting to impose octane disclosure requirements. In rejecting Johnson’s argument that her claim only applied to the false advertising of the brand and quantity of the gasoline grade sold, the court noted that her claim directly relates to the octane labeling of the operators’ gasoline.

Additionally, success of Johnson’s MMPA claims would create additional or new octane disclosure requirements from those under the PMPA. Although Johnson did not allege that the operators made false advertisements of their octane ratings, Johnson sought relief to correct such false and misleading advertisements. Even if Johnson only requested monetary relief, her MMPA would be preempted, according to the court. A finding in her favor would in effect impose a state law requirement to warn consumers about the amount of fuel dispensed at the designated octane level, according to the court.

Implied preemption. The plaintiff’s MMPA claim was also impliedly preempted, since it would impose state law labeling requirements which would impede PMPA’s purpose of enacting a uniform system of octane disclosures. A finding on Johnson’s MMPA claim would either force the operators to make additional disclosures regarding the fuel pump’s ability to dispense the full amount of the selected grade or remove the octane disclosures altogether. Either result would interfere with the Congressional purpose of presenting octane disclosure information in a simplistic format and creating a uniform system of regulations governing octane disclosures.

Finally, state law precluded Johnson’s MMPA claim. Missouri law expressly preempts the inspection and imposition of specifications on the sale of fuel. The law also provides a safe harbor from liability since the operators’ single-hose blender gasoline pump is expressly allowed as a permissible measuring device for gasoline dispensing. The MMPA could not be used to impose liability for conduct that is permitted and highly regulated under state law, the court concluded.

The case is No. 4:11-cv-00981-DGK.

Attorneys: Brendan J. Donelon (Donelon, PC) for Joyce A. Johnson. Michael R. Tripp (Smith Lewis, LLP) for MFA Petroleum Company. Holly P. Smith (Shook, Hardy & Bacon, LLP) for Casey’s General Stores, Inc. Tristan L. Duncan (Shook, Hardy & Bacon, LLP) for Quiktrip Corporation.

Companies: MFA Petroleum Company; Casey’s General Stores, Inc.; Quiktrip Corporation

Cases: FranchisingDistribution StateUnfairTradePractices MissouriNews