Home Oil Co. Inc. v. Sam's East, Inc., CIV.A.01-F-1251-S.

• Decision Date: 26 February 2003
• Docket Number: No. CIV.A.01-F-1251-S.,CIV.A.01-F-1251-S.
• Parties: HOME OIL COMPANY, INC., Plaintiff, v. SAM'S EAST, INC., Defendant.
• Court: U.S. District Court — Middle District of Alabama

252 F.Supp.2d 1302

HOME OIL COMPANY, INC., Plaintiff, v. SAM'S EAST, INC., Defendant.

No. CIV.A.01-F-1251-S.

United States District Court, M.D. Alabama, Southern Division.

February 26, 2003.

COPYRIGHT MATERIAL OMITTED

H. Dean Mooty, Jr., Mooty & Associates, PC, Montgomery, AL, for Home Oil Company, Inc., plaintiff.

Derek Peterson, Gunter & Peterson, Abbeville, AL, Steven A. Benefield, Clark A. Cooper, Greer B. Mallette, A. Melissa Boles, Christian & Small, LLP, Birmingham, AL, for Sam's East, Inc., defendant.

MEMORANDUM OPINION AND ORDER

FULLER, District Judge.

Home Oil Company, Inc. ("Home Oil") filed this action against the defendant, Sam's East, Inc. ("Sam's") on October 25, 2001, claiming that it had violated and continued to violate the Alabama Motor Fuel Marketing Act ("AMFMA" or "the Act"), Ala.Code §§ 8-22-1 to -18 (1975) by selling gasoline to consumers below cost.¹ (Compl., Doc. # 1.) As a result of the claimed violations, Home Oil seeks injunctive relief, as well as attorney's fees and civil penalties. Sam's has filed a counterclaim for declaratory relief claiming that it is permitted to meet the rebated price gasoline sold by a competitor. ( Am. Answer of Def. Sam's East, Inc. and Countercl. for Declaratory Relief, Doc. # 43 at 7-10).

This cause is currently before the court on Sam's Motion for Summary Judgment (Doc. #67), filed September 30, 2002. The court will also rule on Sam's Motion to Strike (Doc. #94), filed November 20, 2002.

This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332:

FACTS AND PROCEDURAL HISTORY

Home Oil is an Alabama corporation that owns and operates a Chevron-branded gas station at 2977 Montgomery Highway, Dothan, Alabama, which it calls Hobo Pantry No. 17 ("Hobo 17"). (Pl..'s Resp. in Opp. to Def.'s Mot. for Summ. J., Doc. #83 at 3.) Hobo 17, which offers three grades of gasoline for sale and operates a convenience store in conjunction with its station, has operated 24-hours-a-day since it opened in April of 1991. (Id.)

Approximately 600 yards from Hobo 17, Sam's operates a gas station that opened for business on December 6, 2000. (Id.) Sam's station offers only two grades of gasoline and is not a 24-hour facility. (Id) It is located on the premises of a Sam's Wholesale Club, which sells food and other goods to Sam's Club members. To become a Sam's Club member, one is obliged to pay a membership fee ranging between $30-$200. (Doc. #84 Ex. 2 at 26.) On the dates in question in this action, Sam's offered to sell gasoline to customers who presented a Sam's membership card at a price five-cents-per-gallon lower than the price offered to those customers who did not present a Sam's membership card. (Doc. # 83 at 4.)

Home Oil claims that Sam's has violated the AMFMA on various occasions in October, 2001 by offering to sell gasoline to both members and nonmembers at prices below cost as defined in the Act. (Doc. # 83 at 4.) As a result of these alleged illegal pricing practices, Home Oil claims it has suffered a decrease in gasoline sales at Hobo 17. (Id.)

After a hearing on these allegations, the magistrate judge assigned to this case recommended that Sam's be preliminarily enjoined from employing a pricing strategy that violated section 8-22-6. (Doc. # 23.) The court adopted the magistrate judge's recommendation and entered a preliminary injunction against Sam's on May 3, 2002 (Doc. # 36).

SUMMARY JUDGMENT STANDARD

Summary judgment can be entered on a claim only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

The party seeking summary judgment bears the initial burden of showing the absence of a genuine issue of material. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden then shifts to the nonmovant to make "a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial." Earley v. Champion Int'l Corp., 907 F.2d 1077, 1080 (11th Cir.1990). To satisfy this burden, the nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "The mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Hairston v. Gainesville Sun Publ'g Co., 9 F.3d 913, 919 (11th Cir.1993) ("Genuine disputes are those in which the evidence is such that a reasonable jury could return a verdict for the non-movant."). However, the court is to construe the evidence and factual inferences arising therefrom in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir.1996).

DISCUSSION I. Motion to Strike Hearsay

Because it will become important to the analysis of Sam's summary judgment motion, the court will first address Sam's Motion to Strike (Doc. # 94), filed November 20, 2002. In its motion, Sam's asserts that certain testimony given by Tim Shirley (Home Oil's President), relating to "statements of customers purporting to ask why they should buy gas from Home Oil when they could go to Sam's and buy it cheaper," (Doc. # 94 at 1) and relied upon by Home Oil in its response in opposition to Sam's summary judgment motion should be stricken as hearsay.

Sam's claims that various hearsay statements relied upon in Home Oil's Response in Opposition to Sam's Motion for Summary Judgment (Doc. # 83 at 8-9) and contained in Home Oil's supporting evidentiary documentation (Doc. # 84 Ex. 1 at 99-100; Ex. 9 at 38-39, 48-53, 57-59) should be stricken, without specifying exactly which. (Doc. # 94 at 1.) The disputed statements, as the court understands them, follow:

Q To what do you attribute the volume loss we have identified earlier in your 13 month sales analysis? A Sams [sic].

Q Why not another competitor?

A Gasoline marketing is complicated. But to answer, my customers have told me that. They ask me continuously why they should pay me for gas than they do Sams [sic].

(Excerpts from Tr. of Hr'g in Pl.'s Mot. for Prelim. Inj., Doc. # 84 Ex. 1 at 99-100.) Sam's also claims that portions of Mr. Shirley's deposition testimony relied upon by Home Oil are inadmissible hearsay:

A[M]y personnel in the stores having to answer to the customers on a daily basis why we are consistently priced seven to eight to ten cents a gallon above ....

... and they are saying, you know, how can they sit there and sell 10—at that time, 15 cents under you? You know, it's very difficult to do when you sit there and say, well, they are selling gasoline below cost. Well, why don't you sell it below cost?

(Doc. # 84 Ex. 9 at 38.)

Q What is the customer testimony that you claim shows loss of store sales in September of 2001?

A General conversations that I had with customers at all points in time during the months of September and October, some of them even stating that they were going over there buying gas because they couldn't afford to pay my prices and they couldn't understand why.

Q Okay. Can you tell me any specific customers that you talked to and what they said?

A Yes, sir, Buddy Knight.

And he wanted to know why I expected him to do business with me at higher prices when he could go across the road and save 10, 15 cents a gallon.

Q Can you recall any other conversation with a person that you remember in the fourth quarter of 2001 about pricing along the same lines as Buddy Knight?

A Not specifically. I can't remember their names.

Q Can you tell me how many conversations you had with customers complaining about your pricing?

A Hundreds.

Q Did the customers specifically mention Sam's?

A Yes, sir.

Q All of them?

A No, sir.

Q What percentage of them? Do you have a judgment?

A No, sir.

(Doc. # 84 Ex. 9 at 48-52, 57.)

Sam's asserts that these statements are hearsay under Rule 801 of the Federal Rules of Evidence "because they are included in testimony given by a witness who is reciting what others have told him or what he has heard said by others, and they are statements, other than those made by the declarant while testifying, offered in evidence to prove the truth of the matter asserted." (Doc. # 94 at 2.) As a result, Sam's argues that their inclusion in the court's consideration on summary judgment would violate Rule 56(e) of the Federal Rules of Civil Procedure, requiring that affidavits in support of opposition to summary judgment must be made on personal knowledge and "shall set forth such facts as would be admissible in evidence (Doc. # 94 at 1.)

Home Oil does not dispute that the statements in question are in fact hearsay (Pl.'s Resp. to Mot. to Strike, Doc. # 101); ergo the court will not dwell on that issue, but will assume that they are. However, Home Oil claims that because Mr. Shirley identified one customer with whom he had had such a conversation, Buddy Knight, and because some of the testimony was admitted into evidence during the preliminary injunction hearing in this case without objection the testimony is already part of the record and may properly be considered by the court in ruling on summary judgment. (Doc. # 101 at 1-2.)

Sam's counters by asserting that the fact that Mr. Shirley's testimony was admitted during the preliminary injunction hearing in this case without objection is irrelevant. (Def.'s Reply to Pl.'s Resp. to Mot. to Strike, Doc. #105 at 1.) Sam's points out that declarations...