Lotus Business Group LLC v. Flying J Inc.

• Decision Date: 12 October 2007
• Docket Number: No. 07-C-0144.,07-C-0144.
• Citation: 532 F.Supp.2d 1011
• Parties: LOTUS BUSINESS GROUP LLC, Plaintiff, v. FLYING J INC., Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

532 F.Supp.2d 1011

LOTUS BUSINESS GROUP LLC, Plaintiff, v.FLYING J INC., Defendant.

No. 07-C-0144.

United States District Court, E.D. Wisconsin.

October 12, 2007.

Opinion Denying Reconsideration November 27, 2007.

Robert E. Hankel, Hankel Bjelajac Kallenbach Lehner & Koenen LLC, Racine, WI, for Plaintiff.

John W. Mackay, Jonathan A. Dibble, Ray Quinney & Nebeker PC, Salt Lake City, UT, Jon E. Fredrickson, Mark M. Leitner, Kravit Hovel & Krawczyk SC, Milwaukee, WI, for Defendant.

DECISION AND ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

WILLIAM E. CALLAHAN, JR., United States Magistrate Judge.

I.PROCEDURAL AND FACTUAL BACKGROUND

This action was commenced on December 18, 2006, when the plaintiff, Lotus Business Group LLC("Lotus"), filed a complaint in the Milwaukee County Circuit Court alleging that on numerous occasions in 2006, the defendant, Flying J Inc.("Flying J"), engaged in the selling of motor vehicle fuel in violation of Wis. Stat. § 100.30.Specifically, Lotus alleges that Flying J's selling of motor vehicle fuel at a price below the "average posted terminal price" plus a 9.18% minimum markup at the truck stop in Black River Falls, Wisconsin was in violation of Wisconsin's minimum markup statute.On February 12, 2007, Flying J removed the action to the United States District Court for the Eastern District of Wisconsin pursuant to 28 U.S.C. § 1441, claiming that this court has diversity jurisdiction over the action pursuant to 28 U.S.C. § 1332.On February 20, 2007, Flying J filed its answer, in which it set forth several affirmative defenses, including, inter alia, that enforcement of the provisions of Wis. Stat. § 100.30 would violate both the Supremacy¹ and Commerce² Clauses of the United States Constitution.

This court has jurisdiction, over this action pursuant to 28 U.S.C. § 134 and venue in the Eastern District of Wisconsin is proper pursuant to 28 U.S.C, § 1391.Both parties have, consented to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c)andGeneralL.R. 73.1(E.D.Wis.).³Currently pending before the court, is.Flying J's motion, for summary judgment, which is fully briefed and is ready for resolution.For the reasons which follow, the defendant's motion for summary judgment will be granted.

In accordance with the provisions of Civil LocalRule 562(a)(E.D.Wis.), the defendant's motion for summary judgment was accompanied by a set of proposed findings of fact.The plaintiff Bled responses to the proposed findings of fact set forth by the defendant.The plaintiff filed its own additional proposed findings Of fact, and the defendant filed its responses thereto.A review of the parties' respective proposed findings and the responses thereto reveal that the following are (except where noted) the undisputed facts that are relevant to the disposition of the motion for summary judgment.

Lotus is a Delaware limited liability corporation with its principal place of business at Kenosha, Wisconsin (Defendant's Proposed Findings of Fact ("DPFOF")¶ 2.)Lotus is in the business of operating a fuel sales station under the name Lotus Travel Center in DeForest, Wisconsin.(DPFOF ¶ 3.)

Flying J is a Utah corporation with its principal place of business in the State of Utah.(DPFOF ¶ 4.)Flying J is in the business of operating fuel sales stations and operates stations at Black River Falls, Wisconsin and Oak Creek, Wisconsin.(DPFOF ¶ 5.)

In 1939, the Wisconsin legislature enacted the Unfair Sales Act, Wis. Stat. §. 100.30, which created a floor on the price of motor fuel.Currently, the statute mandates a minimum, markup of 948% above the "average terminal price," a proxy for wholesale costs based on an industry index.(DPFOF ¶ 6.)The original minimum markup in 1939 was 6%.(DPFOF ¶ 8.)

In 1939, the average retail price of gasoline in the United States was 18.8 cents per gallon.(DPFOF ¶ 7.)Since its enactment, the minimum markup has been amended once.In 1997, the Wisconsin legislature amended the markup formula to require a 6% markup above certain actual costs or a 9.18% markup above the "average terminal price," whichever is greater.The amendment took effect in Wisconsin on August 1, 1998.(DPFOF ¶ 8.)

In August 1998, the average retail price of regular gasoline in the United States was $1.03 per gallon, and the average retail price of diesel fuel was $1.01 per gallon.(DPFOF ¶ 9.)In September 2006, the average price of regular gasoline was $2.43 per gallon.(Plaintiff's Proposed Findings of Fact ("PPFOF")¶ 4.)In May 2007, in the Midwest region of the United States the average retail price of regular gasoline was $3.32 per gallon, and the average price of diesel fuel was $2.78 per gallon.(DPFOF ¶ 11.)

Since 1998, inflation has, been approximately 27%, and gasoline prices, have increased over 200%.(DPFOF ¶ 12.)

In May 2007, fuel prices in Wisconsin reached $3.49 per gallon for regular gasoline and $2.99 per gallon for diesel fuel.(DPFOF ¶ 13.)

In May 2007, the cost to Flying J to purchase regular gasoline was approximately between $3.43 and $3.03 per gallon, and the cost to purchase diesel fuel was approximately between $2.82 and $2.63 per gallon.(DPFOF ¶ 14.)

Applying Wisconsin's 9.18% minimum markup and assuming that the retailer purchases at "average terminal price" under the statute, a gallon of gasoline that retails at $3.49 per gallon has a built in markup price of approximately $0.32 per gallon.A gallon of diesel fuel that retails at $2.99 has a built in markup price of approximately $0.27 per gallon.(DPFOF ¶ 15.)

The Federal Trade Commission performed a detailed analysis criticizing the Wisconsin Unfair Sales Act in 2003.(DPFOF ¶ 18; Ex.C, Federal Trade Commission, Re: Wisconsin's Unfair SalesAct(October 15, 2003, available at http:// www.ftc.gov/be/v030015.shtm.))In October 1999, the Wisconsin Policy Research Institute issued a report concluding that the Act has "kept gasoline prices higher than would otherwise be the case."(DPFOF ¶ 19; Ex. D.)

A 2004 study at the University of Wisconsin-Whitewater concluded that states with "sales below costs" laws average lower gas prices.(PPFOF ¶ 5; Ex. E.)

II.SUMMARY JUDGMENT STANDARD

A district court must grant summary judgment "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 a judgment as a matter of law."Fed.R.Civ.P. 56(c).

The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial."Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538(1986)(quoting advisory committee's note to 1963amendment of Fed.R.Civ.P. 56(e))."Summary Judgment is not appropriate `if the evidence is such that a reasonable jury could return a verdict for the nonmoving party."Payne v. Pauley,337 F.3d 767, 770(7th Cir.2003)(quotingAnderson v. Liberty Lobby, Inc.,477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986)).

"[A]party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on Me, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact."Celotex Corp. v. Catrett,477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986).A party opposing a properly supported summary judgment motion"may not rest upon the mere allegations or denials of the adverse party's pleading" but rather must introduce affidavits or other evidence to "set forth specific facts showing that there is a genuine issue for trial."Fed.R.Civ.P. 56(e);see alsoOutlaw v. Newkirk,259 F.3d 833, 837(7th Cir.2001).To state it differently, "`[a]party will be successful in opposing summary judgment, only, when they present definite, competent evidence to rebut the motion,'"EEOC v. Sears, Roebuck & Co.,233 F.3d 432, 437(7th Cir.2000)(quotingSmith v. Severn,129. F.3d 419, 427(7th Cir.1997)).

To determine, whether a genuine issue of material, fact exists, the court must review the record, construing all facts in the light most favorable to the nonmoving party and drawing all reasonable inferences in that party's favor.Heft v. Moore,351 F.3d 278, 282(7th Cir.2003)(quotingAnderson,477 U.S. at 255, 106 S.Ct. 2505)."`In the light most favorable' simply means that summary judgment is not appropriate if the court must make `a choice of inferences.'"Draghi v. County of Cook,184 F.3d 689, 691(7th Cir.1999)(quotingSmith,129 F.3d at 425)."The evidence must create more than `some metaphysical doubt as to the material facts.'"Albiero v. City of Kankakee,246 F.3d 927, 932(7th Cir.2001)(quotingJohnson v. Univ. of Wisconsin-Eau Claire,70 F.3d 469, 477(7th Cir.1995)).A mere scintilla of evidence in support of the nonmovant's position is insufficient.Id.(citingAnderson,477 U.S. at 252, 106 S.Ct. 2505).

Thus, "the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."Celotex,477 U.S. at 322, 106 S.Ct, 2548.

III.DISCUSSION

The Wisconsin Unfair Sales Act prohibits, inter alia, retailers of motor fuel from selling fuel below "cost":

Any 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, impairs and prevents fair...