Howard v. Ferrellgas Partners, L.P.

• Decision Date: 16 March 2015
• Docket Number: Case No. 2:10–CV–2555–JTM.
• Citation: 92 F.Supp.3d 1115
• Parties: Randy HOWARD, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. FERRELLGAS PARTNERS, L.P.; Ferrellgas, L.P.; Ferrellgas, Inc.; and Does 1 through 25, Defendants.
• Court: U.S. District Court — District of Kansas

92 F.Supp.3d 1115

Randy HOWARD, Individually and on Behalf of All Others Similarly Situated, Plaintiff

v.FERRELLGAS PARTNERS, L.P.; Ferrellgas, L.P.; Ferrellgas, Inc.; and Does 1 through 25, Defendants.

Case No. 2:10–CV–2555–JTM.

United States District Court, D. Kansas.

Filed March 16, 2015.

Helen I. Zeldes, Aaron M. Olsen, Zeldes Haeggquist & Eck, LLP, San Diego, CA, Peggy J. Wedgworth, Andrei V. Rado, Charles Slidders, Elizabeth S. Metcalf, Milberg LLP, New York, NY, R. Frederick Walters, Walters Bender Strohbehn & Vaughan, P.C., Kansas City, MO, for Plaintiff.

Kathryn R. Debord, Bryan Cave LLP, Denver, CO, Rick E. Frawley, Ferrellgas, LP, Liberty, MO, Robert M. Thompson, Craig S. O'Dear, Bryan Cave LLP, Kansas City, MO, for Defendants.

ORDER

J. THOMAS MARTEN, Chief Judge.

Plaintiff Randy Howard, on behalf of himself and all others similarly situated, seeks damages against defendants Ferrellgas Partners, L.P.; Ferrellgas, L.P.; and Ferrellgas, Inc. (collectively “defendant”) for allegedly engaging in unfair, unconscionable, deceptive, misleading, and unlawful conduct in connection with the marketing and sale of propane and related equipment and services. Pursuant to the Federal Arbitration Act (“FAA”), and at the direction of the Tenth Circuit, on November 12, 2014, this court conducted a summary trial to determine one basic, preliminary question: are the parties bound by an arbitration agreement, and therefore required to arbitrate, not litigate, the above-listed claims? Based on the evidence presented at trial and the applicable law, the court answers this question in the affirmative, as described below.

I. Facts and Procedural History

The parties' story is nothing new: customer needs a good, customer locates a supplier of said good, customer offers to buy the good from the supplier, and the supplier agrees to sell consumer the good. In fact, the parties agree that this is exactly what happened. Plaintiff, a resident of California, needed propane for his residential use. Dkt. 114, at 1–2. Having never been a consumer of residential propane before, plaintiff shopped around and ultimately decided on service from defendant, a nationwide provider of propane, propane services, and equipment. Dkt. 115, at 3.¹ On August 21, 2008, plaintiff called defendant and reached one of its representatives, Adrienne Williams, in Vancouver, Washington. Dkt. 114, at 2; Dkt. 115, at 3. The agreed-upon facts of the content of this telephone call are as simple as those generic ones stated above: plaintiff needed propane, plaintiff determined that defendant was a supplier of propane, plaintiff requested propane from defendant, and defendant agreed to sell plaintiff propane. Dkt. 114, at 2; Dkt. 115, at 4. The contents of this August 2008 telephone call shall hereinafter be referred to as the “Oral Contract.” On September 5, 2008, defendant installed a 250–gallon propane tank on plaintiff's property and filled it with 217.60 gallons of propane, for which it charged plaintiff an introductory rate of $2.11 per gallon. Dkt. 115, at 4. This September 5, 2008, fill of propane shall hereinafter be referred to as the “First Fill.”

This, however, is where the simplicity ends. What appears, at least on the surface, to be a simple consumer transaction, is currently embroiled in a game of “he said, they said” that has now spanned nearly five years. At the heart of this quagmire, at least for this court's purposes, is one significant question: does this case even belong in litigation? The parties clearly disagree as to the answer to this crucial question, as set forth below.

A. Plaintiff's Allegations

According to plaintiff, on that fateful day in August 2008, he entered into an oral contract with defendant not only for the tank rental and the First Fill, but also for all subsequent fills of propane thereafter. Plaintiff claims that he became a “keep full” customer, meaning that defendant promised to monitor the propane level in his tank from afar and refill as necessary, without any further request from plaintiff. Dkt. 114, at 2. Plaintiff alleges that he was not bound by any terms and conditions and never saw, let alone signed, any written document memorializing his relationship with defendant. Plaintiff claims that defendant's representative told him that, after the First Fill, which was assessed at a special introductory per-gallon rate, plaintiff would be charged at propane's current “market price.”

B. Defendant's Allegations

Defendant's version of events is decidedly different. While it admits that there was, in fact, an Oral Contract, defendant argues that this Oral Contract governed only plaintiff's tank set and First Fill. The rest of plaintiff's propane fills were governed by a written Master Agreement, a document that contained, generally, defendant's terms and conditions of the consumer relationship and, more relevantly, arbitration and integration clauses. Defendant alleges that it mailed this Master Agreement to plaintiff on September 26, 2008, in conjunction with an entire Customer Packet that also contained a service letter describing the services and products plaintiff had purchased and the Ferrellgas Safety Plan, which set forth the mandated requirements and procedures for inspection and maintenance of propane and propane equipment. Dkt. 115, at 4–5. Plaintiff denies receiving this packet in September 2008.

C. The Master Agreement

This brings the court to the current issue of whether plaintiff's substantive claims must, in fact, be arbitrated, pursuant to the terms and conditions of the Master Agreement. The relevant portions of the Master Agreement read as follows:

PLEASE READ THIS MASTER AGREEMENT FOR PROPANE SALES AND EQUIPMENT RENTAL (this “Agreement”) CAREFULLY. The terms and conditions of this Master Agreement will be accepted by you when one of the following occurs: (1) you request or accept delivery of propane, service or equipment from us; (2) you pay for delivery of propane, service or equipment from us; or (3) you permit Propane or equipment obtained from us to remain on your property for more than thirty (30) days after your receipt of this Agreement. If you do not wish to be bound by this Agreement, please contact Ferrellgas within thirty (30) days after your receipt of this Agreement and terminate service. The terms of this Agreement also will apply to sales of refined fuel products.

8. Arbitration

a. Agreement to Arbitrate. You agree that any claim, dispute or controversy, whether in contract, tort (intentional or otherwise), including without limitation, product liability, property damage, personal injury claims or claims based on strict liability, whether pre-existing, present or future, and including constitutional, statutory, common law, regulatory and equitable claims in any way relating to (a) the Service; (b) and Rented Equipment or equipment sold to you by us; (c) the Agreement; (d) Propane delivered or sold by us; or (e) the Safety Plan, advertisements, promotions or other brochures or writings prepared by us in any way relating to the Service or this Agreement and/or the relationship between you and us, including the validity, enforceability or scope of this Section or any part thereof (collectively, a “Claim”) shall be resolved, upon the election of either you or us, by binding arbitration.

e. General Statements.... YOU ACKNOWLEDGE THAT YOU HAVE A RIGHT TO LITIGATE CLAIMS IN COURT BEFORE A JUDGE OR JURY, BUT YOU PREFER TO RESOLVE ANY SUCH CLAIMS THROUGH ARBITRATION AND KNOWINGLY AND VOLUNTARILY WAIVE YOUR RIGHTS TO LITIGATE SUCH CLAIMS IN COURT BEFORE A JUDGE OR A JURY, UPON ELECTION OF ARBITRATION BY YOU OR BY US. YOU WILL NOT HAVE THE RIGHT TO PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS PERTAINING TO ANY CLAIM SUBJECT TO ARBITRATION, EVEN IF SUCH CLASS ACTION IS PENDING ON THE EFFECTIVE DATE OF THIS ARBITRATION PROVISION, EXCEPT THAT THIS ARBITRATION PROVISION WILL NOT PRECLUDE YOUR PARTICIPATION IN A CLASS WHICH HAS ALREADY BEEN CERTIFIED ON THE EFFECTIVE DATE OF THIS ARBITRATION PROVISION. THIS SECTION 8 APPLIES ONLY TO THE EXTENT PERMITTED UNDER YOUR STATE LAW.

Trial Ex. 3, at 2, 8, 18. It also contained an integration clause:

13. Miscellaneous.

c. Entire Agreement. This Agreement, together with the Service Letter and Safety Plan and any written agreements signed between us that are limited to pricing and cover the current period, constitute the entire agreement between us. No employee, representative or agent has any authority to vary the terms of this Agreement.

Trial Ex. 3, at 18–21 (emphasis in original).²

Over the course of two years, plaintiff received and accepted ten deliveries of propane from defendant:

Date	Quantity	Price Charged	Price Paid
August 27, 2008	50	$2.11	$2.11
	September 5, 2008	167.6	$2.11	$2.11
	December 3, 2008	57.8	$4.71	$2.85
	January 27, 2009	79.9	$4.92	$2.95
	March 12, 2009	53.2	$2.82	$2.82
	May 20, 2009	28.4	$2.82	$2.82
	October 14, 2009	473	$3.22	$2.25
	December 17, 2009	76.8	$2.50	$2.50
	January 22, 2010	67	$2.64	$2.64
	March 9, 2010	74.6	$2.38	$2.38

Trial Ex. 34. On three occasions, December 3, 2008; January 27, 2009; and October 14, 2009; plaintiff called defendant to complain that the “price charged” for propane was well above the market price. Dkt. 115, at 7. In response to plaintiff's complaints, defendant lowered the price charged. Plaintiff terminated service with defendant in September 2010 when he sold his house. Dkt. 115, at 7.

On October 13, 2010, plaintiff filed this putative class action lawsuit against defendant alleging breach of an oral contract to supply propane at a “market price,” breach of an implied covenant of good faith and fair dealing, violations of the Kansas Consumer Protection Act, K.S.A. § 50–623 et seq. (“KCPA”), as well as claims for promissory estoppel and unjust enrichment. Dkt. 1. Defendant moved to dismiss the Complaint on December 10, 2010. Dkt. 23. On August 1, 2011, the court sustained defendant's motion with respect to plaintiff's KCPA, promissory estoppel,...