Cole v. Chevron Usa, Inc., Civil Action No. 2:06cv249KS-JMR.

554 F.Supp.2d 655

Robert L. COLE; Lillie R. Ash; Jessie M. Haynes; Joyce M. Loftin; Doretha S. Hicks; Rennete McKnight; Randy Beesley; Charles Williams; Shelia A. Booth; Bertie W. Davis; Margarett Coleman; Mary Revette; Janet Revette; Brenda Johnson; Patty McDonald; Deborah A. Madison; Lela M. Hall; Sharron Buchanan; Earnestine Fortenberry; Denise Mikell; James Arrington; Deritt P. Loper; Willie Woullard; Latoyna Y. Richardson; Gloria L. Buxton; Mileharmar Dodson; Charlie Turner; Lue Q. White; Sherry A. Buckley; Troy Housely; Mae Heidelberg; Brenda C. Rhodes; Lydia Harris; Mildred D. Price; Willie McCulum; Mary P. Walker; Jon Holloway; Regina Jones and Brenda Jenkins, On Behalf Of Themselves And All Other Similarly Situated, Plaintiffs v. CHEVRON USA, INC.; Citgo Petroleum Corporation; BP Products North America, Inc.; Exxonmobil Corporation; Exxonmobil Oil Corporation; Exxonmobil Pipeline Company; ConocoPhillips Company; Murphy Oil USA, Inc.; Shell Oil Products Company, LLC; And Defendants "A" Through "Z" Entities, Defendants.

Civil Action No. 2:06cv249KS-JMR.

United States District Court, S.D. Mississippi, Hattiesburg Division.

September 24, 2007.

COPYRIGHT MATERIAL OMITTED

John Arthur Eaves, John Arthur Eaves, Jr., John Arthur Eaves Law Office, Jackson, MS, for Plaintiffs.

John G. Corlew, Katherine K. Smith, Watkins & Eager, Alan Walter Perry, H. Barber Boone, John Chase Bryan, Jason D. Watkins, Phillip S. Sykes, Forman Perry Watkins Krutz & Tardy LLP, Kenneth W. Barton, Benjamin McRae Watson, John Adam Crawford, Jr., Butler, Snow, O'Mara, Stevens & Cannada, William L Smith, Balch & Bingham, LLP, John G. Corlew, Katherine K. Smith, Watkins & Eager, Jeffery P. Reynolds, Teri Dunaway Gleason, Jeffery P. Reynolds, P.A., Jackson, MS, Kelli A. Crouch-PHV, Robert A. Mittelstaedt-PHV, Jones Day, San Francisco, CA, Greg J. Weintraub-PHV, Nathan P. Eimer-PHV, Eimer, Stahl, Klevorn & Solberg, J. Andrew Langan-PHV, Matthew S. Buckley-PHV, Wendy L. Bloom-PHV, Kirkland & Ellis, LLP, Chicago, IL, Richard G. Parker-PHV, O'Melveny & Myers, Washington, DC, Courtney Hawkins-PHV, Kevin Mohr-PHV, Reginald Ross Smith-PHV, King & Spalding, LLP, Houston, TX, for Defendants.

AMENDED MEMORANDUM OPINION AND ORDER

KEITH STARRETT, District Judge.

This matter is before the court on Joint Motion to Dismiss [# 8] filed on behalf of the defendants pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The court, having reviewed the motion, the response, the briefs of counsel, the pleadings and exhibits on file and being Otherwise fully advised in the premises finds that the motion is well taken and should be granted. The court specifically finds as follows:

FACTUAL BACKGROUND AND PROCEDURAL POSTURE

This case originally involved allegations that some fifteen corporations¹ involved in the gasoline industry operating in Mississippi committed price gouging of Mississippi gasoline consumers during the state-of-emergency declared as a result of Hurricane Katrina and continuing through today. The plaintiffs, thirty-nine consumer residents of Mississippi, seek class-certification as representatives of "all persons who purchased gasoline during the declared state of emergency at an inflated price as compared to the price before the state of emergency was declared." Complaint ¶ 78.

The Mississippi Consumer Protection Act ("CPA"), codified in Miss.Code Ann. Section 75-24-1, et seq., prohibits, inter alia, "unfair methods of competition affecting commerce and unfair or deceptive trade practices in or affecting commerce ___" Section 75-24-5(1). Section 75-24-25 of the Mississippi CPA (the "state-of-emergency pricing provision") specifically prohibits profiteering on the sales of goods and services within an "emergency impact area" during a declared emergency. Invoking the private right of action provided for under Section 75-24-15(1) of the CPA, the plaintiffs allege in Count I that the defendants "engaged in unconscionable pricing practices, and unconscionable, deceptive and unfair acts and practices in trade and commerce by implementing unconscionable price increases for motor fuels during [the] State of Emergency [declared as a result of Hurricane Katrina]...." Complaint ¶ 83.

Counts II and III of the Complaint seek the imposition of a constructive trust and punitive damages as a result of the defendants' alleged wrongful acts. Specifically, Count II alleges that the defendants were unjustly enriched at the expense of the plaintiffs "by implementing unconscionable price increases for motor fuel." Complaint ¶ 96. As a result, the plaintiffs seek damages, as well as the imposition of a constructive trust "on all funds gained as a result of the wrongful acts of the Defendants ...." Complaint ¶ 99. In Count III, the plaintiffs seek punitive damages under the averment that the defendants' alleged conduct was "willful, wanton and egregious." Complaint ¶ 101.

The defendants have filed a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Specifically, the defendants contend that the plaintiffs' claims should be dismissed because: (1) the CPA does not provide a private right of action for violations of the state-of-emergency pricing provision; (2) that the plaintiffs have failed to allege the consumer purchases required to constitute a valid claim for violation of the CPA's state-of-emergency pricing provision; (3) that the plaintiffs have failed to pursue an informal dispute settlement program before seeking judicial review, as required under the CPA; (4) that the plaintiffs have not alleged a factual basis under which restitution and/or a constructive trust can be granted; and (5) that neither Mississippi law nor the CPA allows the plaintiffs to seek punitive damages under the alleged facts. The defendants have also moved to strike the plaintiffs' CPA class action claims, citing the CPA's express statutory bar on class action claims under Section 75-14-15(4).

The plaintiffs contest the present motion on all grounds proffered by the defendants, but in the alternative, seek leave to amend the Complaint. However, the defendants contend that amendment should not be allowed and that dismissal should be granted with prejudice because the plaintiffs cannot remedy the defects in the Complaint and, as such, leave to amend would be futile.

STANDARD OF REVIEW

Dismissal pursuant to Rule 12(b)(6) is appropriate if a party fails to state a claim under which relief can be granted. The allegations contained in the complaint must be accepted as true when the court considers whether the plaintiff has stated a cause of action. See Cramer v. Skinner, 931 F.2d 1020 (5th Cir. 1991)(cert. denied, 502 U.S. 907, 112 S.Ct. 298, 116 L.Ed.2d 242 (1991)). Only the complaint and allegations contained therein are to be considered in reaching a decision on a defendants' Rule 12(b)(6) motion to dismiss. "The Rule 12(b)(6) motion ... only tests whether the claim has been adequately stated in the complaint." 5A Wright & Miller, FEDERAL PRACTICE AND PROCEDURE: Civil 2d § 1356 at 298 (1990).

While a complaint need not contain detailed factual allegations to survive a 12(b)(6) motion, the United States Supreme court has held that a plaintiffs "obligation to provide the `grounds' of his `entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.'" Bell Atlantic Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929, 940 (2007)(other citations omitted). The Fifth Circuit's standard of review is in accord with Twombly.

"[T]he complaint must contain either direct allegations on every material point necessary to sustain a recovery ... or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial." 3 Wright & Miller, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2d § 1216 at 156-159 (footnote omitted). `[A] statement of facts that merely creates a suspicion that the pleader might have a right of action' is insufficient. Id. at 163 (footnote omitted). `Dismissal is proper if the complaint lacks an allegation regarding a required element necessary to obtain relief ...' 2A MOORE'S FEDEAL PRACTICE P 12.07 [2.-5] at 12-91 (footnote omitted). The court is not required to `conjure up unpled allegations or construe elaborately arcane scripts to' save a complaint. Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir.1988). Further, `conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.' Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir.1993).

Rios v. City of Del Rio, Tex., 444 F.3d 417, 420-21 (5th Cir.2006) (quoting Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir.1995)).

Finally, because the plaintiffs allege that this court has original jurisdiction of this civil action via complete diversity of the parties under 28 U.S.C § 1332(a)(1), Mississippi law controls substantive issues. Erie R. Co. v. Tompkins, 304 U.S. 64, 78-80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Huss v. Gayden, 465 F.3d 201, 205-06 (5th Cir.2006).

ANALYSIS

I. COUNT I

A. Private Right of Action

In Count I, the plaintiffs seek damages for alleged violations of the state-of-emergency pricing provision of Mississippi's CPA, Miss.Code Ann. § 75-24-25². The first basis argued for dismissal of Count i by the defendants is that the Mississippi CPA does not provide a private right of action for these alleged violations. While undoubtedly the CPA provides a private right of action for certain deceptive and unfair trade practices, (See § 75-24-15)³, whether such a private right exists under the state-of-emergency pricing regulations is an issue of first impression in Mississippi.

According to the defendants, § 25 is primarily a criminal statute as subsections (3...