Gross v. Woodman's Food Market, Inc.

• Decision Date: 14 November 2002
• Docket Number: No. 01-1746.,01-1746.
• Citation: 2002 WI App 295,655 N.W.2d 718,259 Wis.2d 181
• Parties: James J. GROSS and Mall Mart, Inc., both d/b/a Citgo Quick Mart, Plaintiffs-Respondents, v. WOODMAN'S FOOD MARKET, INC., d/b/a Woodman's Food Market Gas Station, a Wisconsin corporation, Defendant-Appellant, ABC CORPORATION, Defendant.
• Court: Wisconsin Court of Appeals

259 Wis.2d 181

2002 WI App 295

655 N.W.2d 718

James J. GROSS and Mall Mart, Inc., both d/b/a Citgo Quick Mart, Plaintiffs-Respondents, v. WOODMAN'S FOOD MARKET, INC., d/b/a Woodman's Food Market Gas Station, a Wisconsin corporation, Defendant-Appellant,¹ ABC CORPORATION, Defendant.

No. 01-1746.

Court of Appeals of Wisconsin.

Oral argument July 25, 2002.

Decided November 14, 2002.

On behalf of the defendant-appellant, the cause was orally argued by and submitted on the briefs of Thomas L. Basting, Sr., of Brennan Steil, Basting & MacDougall, S.C., Janesville.

On behalf of the plaintiffs-respondents, the cause was orally argued by and submitted on the brief of Michael L. Stoker of Johns & Flaherty, S.C., La Crosse.

On behalf of Petroleum Marketers Association of Wisconsin/Wisconsin Association of Convenience Stores, Inc., the cause was orally argued by and submitted on the brief of Thomas L. Skalmoski of Weiss Berzowski Brady LLP, Milwaukee. Before Vergeront, P.J., Roggensack and Lundsten, JJ.

¶ 1. VERGERONT, P.J.

Woodman's Food Market, Inc. appeals the circuit court's summary judgment concluding that it violated the Wisconsin Unfair Sales Act, WIS. STAT. § 100.30 (1999-2000),² by selling motor vehicle fuel below cost as defined in the statute on 295 days, and ordering Woodman's to pay $590,000 to James Gross and Mall Mart, Inc. Woodman's operates a grocery store and adjacent gas station in Onalaska, Wisconsin, and Gross operates Citgo Quick Mart, a convenience store owned by Mall Mart, Inc. that sells motor vehicle fuel in Holmen, Wisconsin.

¶ 2. We conclude that, with respect to 293 days, there are no genuine issues of material fact, and Gross and Mall Mart, Inc. are entitled to judgment as a matter of law that on those dates Woodman's violated the Act by selling motor vehicle fuel below cost as defined in the statute (statutory cost) with the effect of injuring a competitor. In reaching this conclusion, we decide that the circuit court properly exercised its discretion in allowing relation back of the second amended complaint, and we make the following rulings regarding the Act: (1) whether Woodman's is a wholesaler or retailer under the Act is irrelevant in this case because either way the proper terminal for computing the "average posted terminal price" is the terminal closest to Woodman's gas station in Onalaska; (2) Woodman's is a competitor of Gross and Mall Mart, Inc. with respect to diesel fuel because both Woodman's and Citgo Quick Mart offer that fuel for sale to non-Woodman vehicles in the same geographic area; (3) WIS. STAT. § 100.30(3) prohibits sales below statutory cost with either the proscribed intent or the proscribed effect; (4) it is undisputed that Woodman's did not come within the exception of § 100.30(6)(a)7 for meeting a competitor's price; (5) the Act is not unconstitutionally vague as applied to Woodman's; and (6) the Act does not offend due process by prohibiting certain conduct and its effect regardless of the seller's intent.

¶ 3. Woodman's also appealed the circuit court's ruling allowing Gross and Mall Mart, Inc. to withdraw their demand for a jury trial, which Woodman's had also demanded, and ordering that trial would be to the court. However, Gross and Mall Mart, Inc. have conceded that under Village Food & Liquor Mart v. H&S Petroleum, Inc., 2002 WI 92, 254 Wis.2d 478, 647 N.W.2d 177, Woodman's has a constitutional right to a jury trial on any factual issues.

¶ 4. Accordingly, we affirm the summary judgment for 293 days of violations, reverse it as to two days, and remand to the circuit court with instructions to reduce the monetary award on summary judgment to $586,000. We also reverse the court's order that trial will be to the court and remand for a jury trial on all remaining factual issues.

STATUTORY BACKGROUND

¶ 5. Wisconsin's Unfair Sales Act prohibits "[a]ny sale of any item of merchandise either by a retailer, wholesaler, wholesaler of motor vehicle fuel or refiner, at less than cost as defined in this section with the intent or effect of inducing the purchase of other merchandise or of unfairly diverting trade from a competitor. . . ." WIS. STAT. § 100.30(3). In proving a violation, "evidence of any sale of any item of merchandise . . . at less than cost as defined in this section shall be prima facie evidence of intent or effect to induce the purchase of other merchandise, or to unfairly divert trade from a competitor, or to otherwise injure a competitor." Id.³

¶ 6. "Cost" for retail sales of motor vehicle fuel, as relevant to this case, is defined as the higher of two computations, one using the seller's invoice or replacement cost as a base (invoice/replacement formula) and the other using the average posted terminal (APT) price as a base (APT formula). WIS. STAT. § 100.30(2)(am)1m.b and c.⁴ Motor vehicle fuel is purchased at terminals.⁵ The APT price is defined by statute and, in general terms, is the terminal price as published by a petroleum reporting service, plus taxes, transportation, and other charges not already included.⁶ The APT formula then adds a markup of 9.18% to cover the cost of doing business. Section 100.30(2)(am)1m.b and c.⁷ ¶ 7. The requirements of the Act do not apply to sales in certain specified situations, and the exception relevant in this case is for meeting a competitor's price. WISCONSIN STAT. § 100.30(6)7 provides that the provisions of the Act do not apply when:

7. The price of merchandise is made in good faith to meet an existing price of a competitor and is based on evidence in the possession of the retailer, wholesaler, wholesaler of motor vehicle fuel or refiner in the form of an advertisement, proof of sale or receipted purchase, price survey or other business record maintained by the retailer, wholesaler, wholesaler of motor vehicle fuel or refiner in the ordinary course of trade or the usual conduct of business.

Those invoking this exception are required to notify the Department of Agriculture, Trade and Consumer Protection (DATCP) "of the lower price before the close of business on the day on which the price was lowered in the form and manner required by the department." Section 100.30(7)(a). If that is done, the DATCP may not proceed against that person or entity, and there is immunity from liability for a private cause of action. Section 100.30(7)(c). Failure to comply with the notification requirement creates a rebuttable presumption that the price was not lowered to meet a competitor's price. Section 100.30(7)(b).

RELATION BACK OF AMENDED COMPLAINT

¶ 8. Gross filed this action on November 16, 1998, as the individual owner of Citgo Quick Mart. The complaint alleged that Woodman's had sold gasoline and diesel fuel at a price below statutory cost and had injured him as a result.⁸ However, although Gross had initially owned the Citgo Quick Mart as a sole proprietor, he created Mall Mart, Inc. in August of 1998 and transferred the ownership of the store to the corporation on October 1, 1998. Gross filed a motion for leave to amend on December 14, 1999, seeking to add Mall Mart, Inc. as the real party in interest for all violations of the Act occurring after October 1, 1998, and to have the amendment relate back to the date on which the original complaint was filed. The affidavit of Gross's counsel averred that he first learned of the incorporation of Mall Mart, Inc. at Gross's deposition on October 20, 1999; that Gross advised him that he (Gross) had told a former associate of counsel's firm about the corporation, but neither had brought it to counsel's attention, apparently believing it was not relevant to the case. Woodman's consented to the amendment, but objected to its relation back.

¶ 9. The circuit court granted the motion of Gross and Mall Mart, Inc. to allow the amendment to relate back to the filing of the original complaint. The court concluded that the amendment related to the same transactions and operative facts as those in the original complaint, and the failure to name Mall Mart, Inc. in that complaint had not prejudiced Woodman's ability to defend against the claims.

¶ 10. The applicable statute, WIS. STAT. § 802.09(3), provides:

(3) RELATION BACK OF AMENDMENTS. If the claim asserted in the amended pleading arose out of the transaction, occurrence, or event set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the filing of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against such party, the party to be brought in by amendment has received such notice of the institution of the action that he or she will not be prejudiced in maintaining a defense on the merits, and knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against such party.

[1-5]

¶ 11. This statute applies to an amendment to add a plaintiff. Korkow v. Gen. Cas. Co. of Wisconsin, 117 Wis. 2d 187, 196, 344 N.W.2d 108 (1984); Estate of Kitzman v. Kitzman, 163 Wis. 2d 399, 402, 471 N.W.2d 293 (Ct. App. 1991). If the claim asserted in the amendment arises out of the same transaction, occurrence, or event set forth in the original pleading, relation back is presumptively appropriate; however, the circuit court has the discretion to deny leave to amend when it would result in prejudice to the other party. Korkow, 117 Wis 2d at 196-97. We affirm discretionary decisions if the circuit court applied the correct law to the relevant facts of record in a reasoned manner. Grothe v. Valley Coatings, Inc., 2000 WI App 240, ¶ 12, 239 Wis. 2d 406, 620 N.W.2d 463.

¶ 12. Woodman's contends the circuit court erroneously exercised its discretion in allowing relation back because Gross knew that Mall Mart, Inc. was the owner of the store, as did an...