Alvarez v. Chevron Corp..
| Decision Date | 01 September 2011 |
| Docket Number | No. 09–56698.,09–56698. |
| Citation | 75 UCC Rep.Serv.2d 545,2011 Daily Journal D.A.R. 13522,11 Cal. Daily Op. Serv. 11363,656 F.3d 925 |
| Parties | Jonathan ALVAREZ; Emanuel Jiminez; Shaun McCracken; Housam Moumne; Mohammad Moumne; Kent Cochran, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants,v.CHEVRON CORPORATION; Chevron USA, Inc.; Exxon Mobil Corporation; Conocophillips Company; BP Corporation North America, Inc.; BP Products North America, Inc.; BP West Coast Products, LLC; BP North American Petroleum, Inc.; Shell Oil Company; Shell Oil Products Company; Equilon Enterprises, LLC; Valero Energy Corporation; Valero California Retail Company, Defendants–Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
OPINION TEXT STARTS HERE
Robert K. Friedl and Behram V. Parekh (argued), Kirtland & Packard LLP, El Segundo, CA, for the plaintiffs-appellants.Darius C. Ogloza (argued), Latham & Watkins LLP, San Francisco, CA, for Chevron USA, Inc.; Julian Brew, Kaye Scholer LLP, Los Angeles, CA, for Exxon–Mobile Corp.; Corey C. Watson, Kirkland & Ellis LLP, Los Angeles, CA, for BP Products North America Inc., BP North American Petroleum, and BP West Coast Products, LLC; Andrew M. Edison, Edison McDowell & Hetherington LLP, Houston, TX, for Valero California Retail Co. and Valero Energy Corp.; Robin A. Wofford and Hubert Kim, Wilson Turner Kosmo LLP, San Diego, CA, for Shell Oil Co., Shell Oil Products Co., and Equilon Enterprises, LLC; Joseph W. Bell, Zelle Hoffmann Voebel & Mason LLP, San Francisco, CA, for Conocophillips Co.Appeal from the United States District Court for the Central District of California, George H. King, District Judge, Presiding.
D.C. No. 2:09–cv–03343–GHK–CW.Before: STEPHEN REINHARDT, JOHNNIE B. RAWLINSON, and N. RANDY SMITH, Circuit Judges.
Appellants Jonathan Alvarez, Emanuel Jiminez, Shaun McCracken, Housam Moumne, Mohammad Moumne, and Kent Cochran (collectively Plaintiffs), appeal the district court's dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) of their putative consumer class action against Chevron USA, Inc., Exxon–Mobile Corp., Conocophillips Co., BP Products North America Inc., BP West Coast Products, LLC, Equilon Enterprises, LLC, Shell Oil Co., and Valero California Retail Co. (collectively Defendants). Plaintiffs also appeal the district court's denial of leave to amend their second amended complaint.
Plaintiffs' Second Amended Complaint alleged that the design of Defendants' retail gasoline dispensers was fundamentally flawed due to a residual fuel occurrence: when Plaintiffs purchased premium grade fuel, they received between two and three-tenths of a gallon of residual fuel from the previous transaction, and therefore were overcharged when the previous purchaser had selected mid-range or regular grade fuel. Plaintiffs sought to have Defendants remedy this situation by developing a more accurate dispenser or pricing technology, or displaying disclosures at the point of purchase. These allegations fueled Plaintiffs' common law and statutory consumer protection claims.1
We have jurisdiction pursuant to 28 U.S.C. § 1291, and affirm the district court's dismissal of Plaintiffs' second amended complaint without leave to amend because the district court committed no legal error.
I. BACKGROUNDA. Plaintiffs' Allegations2
Defendants sell motor fuel to retail customers at gas stations throughout the United States. Plaintiffs are six individual retail purchasers of “motor fuel with an advertised octane rating of 91 or higher, which was advertised, marketed, distributed, and/or sold, by Defendants ...”
Plaintiffs alleged that Defendants use single-nozzle gasoline dispensers at their gas stations that are less expensive to install and maintain than the previous multi-nozzle variety. Plaintiffs took issue with these single-nozzle dispensers because these nozzles create the residual fuel problem described above.
Plaintiffs alleged that Defendants could and should remedy the residual fuel problem, and proposed three remedies. First, Plaintiffs asserted that “Defendants could implement technological devices that would enable a multi-grade single nozzle pump to deliver 100% of the grade of gasoline contracted for, yet such technology has not been implemented.” Plaintiffs conceded, however, that “technology to completely eliminate the [residual fuel problem] may turn out not to be cost-effective or feasible.” In the alternative, Plaintiffs alleged that Defendants could install technology to charge customers at a lower price for any lower-grade residual fuel pumped for a prior transaction. Third, as a remedy of last resort, Plaintiffs sought the addition of corrective disclosures to the gas pumps' electronic display screens that would alert customers to the residual fuel situation. Plaintiffs submitted no further factual allegations regarding these suggested remedies.
B. California's Regulation of Gasoline Dispensing Devices1. Inspection and Certification of Gasoline Dispenser Designs
The California Department of Food and Agriculture's Division of Measurement Standards (DMS) regulates retail gasoline dispensing. See Cal. Bus. & Prof.Code §§ 12100, 13590, 12500(a)-(b). Any design of commercial weighing and measuring devices must be submitted to DMS for certification that the submitted design meets the requirements of California's regulatory regime. See Cal. Bus. & Prof.Code § 12500.5. If a device is inspected and deemed lawful, or “correct,” it is marked with a seal to be displayed to customers, identifying it as such. See Cal. Bus. & Prof.Code §§ 12505, 12500(c) (). It is illegal to sell or use commercially any weighing or measuring device “of a type or design which has not first been so approved ...” Cal. Bus. & Prof.Code § 12500.5.
2. Handbook 44 Standards: Restrictions on Draining and Price–Changing
California's technical requirements for commercial weighing and measuring “adopt, by reference, the latest standards as recommended by the National Conference on Weights and Measures [NCWM] and published in the National Institute of Standards and Technology [NIST] Handbook 44 ‘Specifications and Tolerances, and other Technical Requirements for Weighing and Measuring Devices [Handbook 44][.]’ ” Cal. Bus. & Prof.Code § 12107; see Cal.Code Regs. tit. 4, § 4000.3 To earn the mandatory seal of approval from DMS, weighing and measuring devices sold or used commercially in California must conform to Handbook 44. See Cal.Code Regs. tit. 4, § 4000.
Handbook 44 standards require two pertinent dispenser design features. First, discharging or draining of gasoline from the meter or hose is prohibited. Second, if dispensers offer multiple grades of gasoline at different prices per grade, NIST Handbook 44 S.1.6.5.4.
3. California Air Resources Board Requirements of Single–Nozzle, Single–Hose Dispensers
In addition to complying with the requirements of the DMS, gasoline service stations must conform to the requirements of the California Environmental Protection Agency Air Resources Board (ARB). The ARB's “Certification Procedure for Vapor Recovery Systems at Gasoline Dispensing Facilities ... [ARB CP–201] [,]” is incorporated by reference into the California Administrative Code. Cal.Code Regs. tit. 17, § 94011. To earn this certification, all facilities installed since 2003 must use single-nozzle, single-hose gasoline dispensers. See ARB CP–201, § 4.11 (Feb. 9, 2005).4
C. Procedural History
Plaintiffs' Second Amended Complaint in this diversity action presented six claims under California law: (1) breach of contract; (2) breach of the duties of good faith and fair dealing; (3) breach of express and implied warranties; (4) a claim predicated on California's Consumer Legal Remedies Act (CLRA), California Civil Code § 1770 et seq. ; (5) a claim predicated on California's Unfair Competition Law (UCL), California Business and Professions Code § 17200 et seq. ; and (6) a claim predicated on California's False Advertising Law (FAL), California Business and Professions Code § 17500 et seq. Defendants, in turn, filed a joint motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).
Defendants presented four grounds for dismissal. Defendants first argued that California's regulatory scheme precluded any liability for the residual fuel problem because it mandates the dispenser and pricing features to which Plaintiff objected. Second, Defendants contended that Plaintiffs' common law claims should be dismissed because they failed to comply with statutory notice requirements, and because Plaintiffs' claim alleging breach of the duties of good faith and fair dealing was duplicative of their breach of contract claim. Third, Defendants argued that any claim or relief that would mandate additional or different disclosures for octane labels was preempted by the federal Petroleum Marketing Practices Act (PMPA), 15 U.S.C. §§ 2821–2824, and the Federal Trade Commission's (FTC's) Posting Rule, 16 C.F.R. § 306.1 et seq. Finally, Defendants argued that the court should abstain from deciding the case under California's equitable abstention doctrine, because the relief sought “would embroil the Court in economic and policy determinations and monitoring activities already governed by a comprehensive [state] regulatory scheme.” 5
The district court granted Defendants' motion without argument, dismissing Plaintiffs' Second Amended Complaint in its entirety without leave to amend. Judgment was entered, and Plaintiffs timely appealed.
II. STANDARDS OF REVIEW
We review de novo the district court's dismissal of a complaint pursuant to ...
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