Opinion
Civil No. 04-120 (PAM/RLE).
August 2, 2004
MEMORANDUM AND ORDER
This matter is before the Court on Defendant's Motion to Dismiss. For the following reasons, the Motion is granted in part and denied in part.
BACKGROUND
Plaintiffs are twenty-three individuals who own and operate thirty-eight BP/Amoco gas stations throughout the Twin Cities. They contend that Defendant BP Products North America, Inc. ("BP") sells gasoline to Plaintiffs' stations at a higher price than BP charges its company-owned stations, in violation of the parties' agreements and of Minnesota and federal antitrust laws. They also contend that this alleged discriminatory pricing constitutes tortious interference with Plaintiffs' customers and unjustly enriches BP.
Plaintiffs' Amended Complaint raises seven counts, but Plaintiffs have conceded that two of these counts, for predatory pricing (Count III) and tying (Count V), should be dismissed. The remaining claims are as follows: Count I — breach of contract; Count II — price discrimination in violation of Minn. Stat. § 325D.03; Count IV — price discrimination in violation of the Robinson-Patman Act; Count VI — tortious interference with customer relationships; and Count VII — unjust enrichment. BP contends that all of these claims fail because Plaintiffs failed to give BP notice of the claims, as required by both the parties' agreements and by the Uniform Commercial Code ("UCC"). Alternatively, BP argues that Plaintiffs have failed to point to any provision of the parties' agreements that BP allegedly breached, that Plaintiffs have failed to make out any antitrust violations under state or federal law, and that Plaintiffs' common-law claims are barred by the economic loss doctrine and the parties' express agreements.
DISCUSSION
A. Standard of Review
For the purposes of the Motion to Dismiss, the Court takes all facts alleged in the Complaint as true. Westcott v. Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). The Court must construe the allegations in the Complaint and reasonable inferences arising from the Complaint favorably to Plaintiff. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). A motion to dismiss will be granted only if "it appears beyond doubt that the Plaintiff can prove no set of facts which would entitle him to relief." Id.;see also Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
B. Notice
1. Dealer Agreement
All but three of the Plaintiffs signed form Dealer Agreements with BP. Paragraph 7(g) of the Dealer Agreement requires that Plaintiffs give BP notice of claims related to invoices. Specifically, this paragraph requires that Plaintiffs "must notify [BP] in writing of any questions or disputes regarding any charges or other items included on any invoice or statement issued to Dealer by [BP] within 60 days after such invoice or statement is received by Dealer. . . ." (See, e.g. Brew Aff. Ex. 1, § 7(g).) BP argues that this provision applies to any pricing dispute, while Plaintiffs contend that the provision applies only to scriveners' errors in the invoices or other statements between the parties.
The remaining three stations signed a previous version of the Dealer Agreement that is substantially similar to the current Dealer Agreement, but does not contain any sort of notice provision.
By its plain terms, the Dealer Agreement requires written notice of disputes regarding invoices. Only under the broadest possible interpretation of this Dealer Agreement does the dispute about the price BP charged its dealers for gasoline fall within the notice requirement. At this stage of the proceedings, the Court declines to determine whether the notice provisions of the Dealer Agreement apply to Plaintiffs' claims. However, even if the dealers were required to give BP notice of their disagreement about the price of gasoline, the Amended Complaint contends that the dealers did give such notice. (Am. Compl. ¶ 29.) Whether this notice is in technical compliance with § 7(g) of the Dealer Agreement is inappropriate on this Motion to Dismiss because it is not clear whether the notice requirement of § 7(g) applies to this dispute. BP's argument on this point fails.
2. UCC
Section 2-607(3)(a) of the UCC, Minn. Stat. § 336.2-607(3)(a), requires a buyer to give a seller notice of any breach of the parties' agreements. Actual notice is sufficient to establish the required UCC notice. See Minn. Stat. 336.2607(3)(a); see also Church of the Nativity of Our Lord v. WatPro, Inc., 491 N.W.2d 1, 5 (Minn. 1992) (overruled on other grounds). On a Motion to Dismiss, the Court is bound to accept the allegations in the Amended Complaint as true. If, as Plaintiffs alleged, they gave actual notice to BP of their claims regarding the price of gasoline, then Plaintiffs have sufficiently alleged compliance with the notice requirements of the UCC. BP's argument on this point also fails.
C. Breach of Contract
BP argues that Plaintiffs' claims for breach of contract fail because Plaintiffs cannot point to any specific contract provision that BP allegedly violated and because Plaintiffs cannot rely on the implied covenant of good faith and fair dealing when an express contract governs the parties' relationship. In part, it seems that BP misapprehends Plaintiffs' breach of contract claim. This claim contends, in large part, that BP violated the implied duty to act in good faith in setting the price for the gasoline it sold to its dealers. There is no dispute that the Dealer Agreement gives BP wide discretion to set the price of gasoline. However, in Minnesota, all contract terms are subject to a duty of good faith. In re Hennepin County 1986 Recycling Bond Litig., 540 N.W.2d 494, 502-03 (Minn. 1995). Thus, although BP is free to set the price it charges its dealers, it is not free to set a price that is unreasonable or is otherwise not a good faith price. See White Stone Partners, LP v. Piper Jaffray Cos., Inc., 978 F. Supp. 878, 881 (D. Minn. 1997) (Tunheim, J.) (finding that party to contract is required to act in good faith when exercising unlimited discretionary power over contract term). Taking Plaintiffs' allegations as true, as the Court must on a Motion to Dismiss, Plaintiffs have sufficiently made out a claim for breach of contract. BP's Motion to Dismiss Count I must be denied.
D. Price Discrimination
Plaintiffs claim that BP's conduct constituted price discrimination in violation of the Robinson-Patman Act, 15 U.S.C. § 13(a), and Minnesota law, Minn. Stat. § 325D.03. The essence of Plaintiffs' claims of price discrimination is that BP sold gasoline to its company-owned stations at a lower price than BP sold the same gasoline to Plaintiffs. BP contends that Plaintiffs' price discrimination claims fail because, under the Robinson-Patman Act, only conduct which has a reasonable possibility to threaten competition is actionable. See Brooke Group Ltd. v. Brown Williamson Tobacco Corp., 509 U.S. 209, 222 (1993) (noting that Robinson-Patman Act protections triggered by reasonable possibility of substantial injury to competition). It is undisputed that Plaintiffs have failed to allege that BP's conduct threatens competition in the retail gasoline market generally.
However, such an allegation is not necessary to state a claim for a violation of the Robinson-Patman Act. "[T]here may be a Robinson-Patman violation even if the favored and disfavored buyers do not compete, so long as the customers of the favored buyer compete with the disfavored buyer or its customers."Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1039 (9th Cir.),aff'd, 496 U.S. 543 (1990). As the Supreme Court's opinion inHasbrouck makes clear, BP may ultimately escape liability if it can prove that the discounts it gave to its wholesalers were legitimate functional discounts. 496 U.S. at 569 n. 29. However, such an inquiry is not appropriate on a Motion to Dismiss. The Amended Complaint sets forth a cause of action for price discrimination under federal and state law, and BP's Motion on these claims must be denied.
E. Tortious Interference
Plaintiffs allege that BP's allegedly discriminatory pricing constitutes tortious interference with Plaintiffs' relationships with their customers. BP argues that Minnesota's economic loss doctrine prohibits Plaintiffs from raising a tortious interference claim as a matter of law. Plaintiffs respond that the tortious conduct alleged is extraneous to the contract and therefore is not barred by the economic loss doctrine.
Minnesota's economic loss doctrine, Minn. Stat. § 604.10(a), prohibits a person from seeking to recover in tort for losses that are contractual in nature. Here, Plaintiffs' claim is that BP's pricing strategy, which was the subject of the parties' contract, allegedly caused Plaintiffs to lose business. This claim is a contractual claim, and is subject to the exclusive remedies of the UCC. In re Grainland Coop Cases, 978 F. Supp. 1267, 1279 (D. Minn. 1997) (Magnuson, J.) (noting that economic loss doctrine is concerned with the exclusiveness of the remedies in the UCC). The UCC does not provide recovery for tortious interference with customer relationships. Plaintiffs' tortious interference claim is barred by the economic loss doctrine and must be dismissed.
F. Unjust Enrichment
Finally, BP argues that Plaintiffs' unjust enrichment claim is precluded because there is no dispute that an express contract governs the parties' relationship. Plaintiffs respond that the unjust enrichment claim is a permissible alternative pleading. However, the Eighth Circuit has noted that "Minnesota does not allow recovery under an unjust enrichment theory when there is an express contract which governs the parties' relations."Northwest Airlines, Inc. v. Astraea Aviation Servs., Inc., 111 F.3d 1386, 1392 n. 4 (8th Cir. 1997). This Court is not free to disregard such statements of the law. Therefore, Plaintiffs' unjust enrichment claim fails.
CONCLUSION
Plaintiffs' claims for breach of contract and price discrimination under federal and state law sufficiently state a claim on which relief can be granted. The claims for tortious interference and unjust enrichment, however, fail to state claims on which relief can be granted and must therefore be dismissed. Accordingly, IT IS HEREBY ORDERED that:
1. Defendant's Motion to Dismiss (Clerk Doc. No. 5) is GRANTED in part and DENIED in part; and
2. Counts III, V, VI and VII of the Amended Complaint (Clerk Doc. No. 4) are DISMISSED with prejudice.