Scharfstein v. BP W. Coast Prods., LLC

292 Or.App. 69

423 P.3d 757

Steven SCHARFSTEIN, individually and on behalf of all other similarly situated persons, Plaintiff-Respondent,andOregon State Bar and Oregon Community Foundation, Respondents,

v.BP WEST COAST PRODUCTS, LLC, a Delaware limited liability company, Defendant-Appellant.

A162289

Court of Appeals of Oregon.

Argued and submitted August 15, 2017.

May 31, 2018

William F. Gary, Eugene, argued the cause for appellant. With him on the briefs were Sharon A. Rudnick, Susan Marmaduke, Nathan R. Morales, and Harrang Long Gary Rudnick P.C.

W. Eugene Hallman, Pendleton, argued the cause for respondent Steven Scharfstein. With him on the brief were David F. Sugerman, Tim Alan Quenelle, Amy Johnson, Joshua Ross and Hallman Law Office.

No appearance for respondents Oregon State Bar and Oregon Community Foundation.

Jill Gibson and Gibson Law Firm, LLC; Doug Kantor, Kate Jensen, and Steptoe & Johnson LLP, filed the brief amicus curiae for National Association of Convenience Stores.

Janet M. Schroer and Hart Wagner LLP filed the brief amicus curiae for Associated Oregon Industries.

Robert M. McKenna, Washington, Daniel J. Dunne and Orrick, Herrington & Sutcliffe LLP filed the brief amicus curiae for The Chamber of Commerce of the United States of America and National Association of Manufacturers.

Before Tookey, Presiding Judge, and DeVore, Judge, and Linder, Senior Judge.

TOOKEY, P. J.

In this class action, plaintiff, Steven Scharfstein, alleged that defendant, BP West Coast Products, LLC (BP), violated the Unlawful Trade Practices Act (UTPA) and the Gasoline Price Advertising Rule by illegally assessing and collecting debit card fees from millions of Oregon consumers.¹ Specifically, plaintiff alleged that BP engaged in unfair or deceptive gasoline price advertising when it failed to disclose that it charged a 35-cent fee for the use of a debit card to purchase gasoline at ARCO and am/pm service stations as required by the rule. A jury found that BP violated the UTPA when it charged a debit card fee because BP failed to disclose the debit card fee on its street signs and, alternatively, because BP charged more than the total amount registered on the gas pump. The trial court certified the class, which ultimately consisted of 2,046,500 individuals who, between January 1, 2011 and August 30, 2013, bought gasoline at Oregon ARCO or am/pm service stations with a debit card and were charged a 35-cent debit card fee. The trial court entered an amended general judgment that awarded plaintiff and the class attorney fees, costs, and $409,300,000 in statutory damages. BP appeals that judgment, raising 10 assignments of error. As we will explain, we conclude that the trial court did not commit reversible error and, accordingly, we affirm.²

I. BACKGROUND

A. Historical Facts

"Because plaintiffs prevailed before the jury in the trial court, we review the facts in the light most favorable to them." Hall v. Dept. of Transportation , 355 Or. 503, 505, 326 P.3d 1165 (2014). BP is a retailer of ARCO-brand gasoline products throughout Oregon, and is a franchisor of the ARCO and am/pm franchise. BP oversees the independent dealer operated ARCO and am/pm service stations in Oregon, and it retains certain rights relating to the implementation of brand standards at ARCO and am/pm service stations. At some ARCO and am/pm service stations, BP assesses a 35-cent fee when a customer pays with a debit card. BP is responsible for the street signs, and it does not allow its franchisees to disclose the debit card fee on its street signs. Additionally, when a customer pays for gasoline with a debit card, the fee is not registered on the gasoline dispensing device and the customer pays more than the amount registered on the pump.

B. Plaintiff’s Specific UTPA Claims

On December 29, 2011, plaintiff filed a putative class action complaint against BP alleging that BP illegally assessed and collected debit card fees in violation of the UTPA. ORS 646.608(1)(u) provides that a "person engages in an unlawful practice if in the course of the person’s business, vocation or occupation the person * * * [e]ngages in any other unfair or deceptive conduct in trade or commerce." For a person’s conduct to constitute "any other unfair or deceptive conduct in trade or commerce" under ORS 646.608(1)(u), the Attorney General must adopt an administrative rule prohibiting that specific conduct. See ORS 646.608(4) ("An action or suit may not be brought under subsection (1)(u) of this section unless the Attorney General has first established a rule * * * declaring the conduct to be unfair or deceptive in trade or commerce."). As we discuss in more detail below, the Attorney General has adopted a rule in OAR chapter 137, division 20, declaring that unfair or deceptive gasoline price advertising is an unlawful trade practice.

In his complaint, plaintiff alleged that BP violated numerous provisions of OAR 137-020-0150. As relevant here, plaintiff alleged that BP "failed to clearly and conspicuously display on all street signs * * * the debit fee charge in violation of OAR 137-020-0150(3)(d)(A)." That rule requires retailers of gasoline to disclose any "condition" affecting the availability of the lowest cash price for gasoline that is advertised on their street signs. See OAR 137-020-0150(3)(d)(A) ("[i]f the lowest cash prices are available only under some conditions * * * [t]he retailer must clearly and conspicuously display all conditions on each street sign, price sign and dispensing device (e.g ., cash only, mini serve")). OAR 137-020-0150(1)(b) defines "condition" as "any payment method (e.g ., credit), service level (e.g ., full service or mini service), or any other modifying circumstance affecting the price per unit of measurement of motor vehicle fuel from the lowest cash price." Additionally, plaintiff alleged that BP "charged more to members of the class than the total amount registered on the dispensing device in violation of OAR 137-020-0150 (4)(e)," which requires retailers to "[c]harge the customer only the total amount registered on the dispensing device at the selected unit price."

C. Procedural Background

To provide general context for the assignments of error, we outline the procedural history of this case. We provide more detail later in our discussion of each individual assignment of error.

Plaintiff sought class certification, and, on August 30, 2013, the court certified a class of individuals who, between January 1, 2011 and August 30, 2013, bought gasoline at Oregon ARCO or am/pm service stations with a debit card and were charged a debit card fee. Before trial, BP moved for summary judgment, arguing that it had not violated OAR 137-020-0150(4)(e) as a matter of law. The court denied BP’s motion for summary judgment. The claims proceeded to trial in January 2014. At the close of evidence, BP moved for directed verdict on plaintiff’s claim under OAR 137-020-0150(3)(d)(A), arguing that the evidence was insufficient to prove that it had violated that rule. Additionally, BP argued that plaintiff had failed to prove causation or reliance. The trial court denied BP’s motion for directed verdict. On January 31, the jury returned a verdict of liability for statutory damages after separately finding that BP had violated OAR 137-020-0150(4)(e) and OAR 137-020-0150(3)(d)(A).³

On February 4, 2014, the jury returned a verdict in favor of BP on the issue of punitive damages.

Then in April of that year, BP filed two motions: The first was a motion to dismiss on the grounds that the Gasoline Price Advertising Rule is invalid, and the second was a motion to strike or, alternatively, to decertify the class on the ground that the statutory damages were unconstitutionally excessive. The trial court denied those motions. On December 14, 2015, after the Supreme Court decided Pearson v. Philip Morris, Inc. , 358 Or. 88, 361 P.3d 3 (2015), BP filed alternative motions for judgment notwithstanding the verdict (JNOV), new trial, and class decertification, reiterating its argument that plaintiff had failed to prove reliance on a class-wide basis. The court denied those motions. On May 31, 2016, the court entered an amended general judgment awarding the 2,046,500 members of the class attorney fees, costs, and $409,300,000 in statutory damages. BP appeals that judgment.

II. DISCUSSION

A. Challenges to OAR 137-020-0150

In its first, second, and third assignments of error, BP challenges various provisions of OAR 137-020-0150, also known as the Gasoline Price Advertising Rule. In BP’s second and third assignments, the essence of BP’s argument is that the rule does not apply to any "flat fee" that is not part of the price per gallon of fuel. We disagree. As we explain below, the rule applies to "conditions" that affect the price per gallon of fuel. The 35-cent debit card fee is a "condition" that affects the price per gallon and, thus, the fee must be displayed on each street sign. Because BP charged a 35-cent debit card fee and did not disclose that "condition" on its street sign as required by OAR 137-020-0150(3)(d)(A), the trial court did not err in denying BP’s motion for directed verdict. Additionally, we decline to address BP’s challenge to plaintiff’s alternative theory of liability under OAR 137-020-0150(4)(e) because, even if it was error to submit that theory of liability to the jury, it would be harmless because the jury separately found BP in violation of OAR 137-020-0150(3)(d)(A).

1. The regulatory framework of OAR 137-020-0150.

ORS 646.930 establishes the minimum requirements that a service station must meet if it has a fuel price sign that is visible from the street. BP West Coast Products, LLP v. Dept. of Justice , 284 Or. App. 723, 725, 396 P.3d 244, rev. den. , 361 Or. 800, 400 P.3d 921 (2017). ORS 646.930(1)(a) provides that a person operating a "service station, business, or other place for the purpose of retailing and delivering gasoline, diesel or other fuel" may "display on...