Ports Petroleum v. Nixon

• Decision Date: 31 January 2001
• Parties: (Mo.banc 2001) . Ports Petroleum Company, Inc. of Ohio, an Ohio Corporation, Appellant, v. Jeremiah W. (Jay) Nixon, Attorney General of the State of Missouri and Missouri Petroleum Marketers Association/ Missouri Association of Convenience Stores, Respondents. SC82473 Supreme Court of Missouri Handdown Date: 0
• Court: Missouri Supreme Court

37 S.W.3d 237 (Mo.banc 2001)

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.

Ports Petroleum Company, Inc. of Ohio, an Ohio Corporation, Appellant, v. Jeremiah W. (Jay) Nixon, Attorney General of the State of Missouri and Missouri Petroleum Marketers Association/ Missouri Association of Convenience Stores, Respondents.

SC82473

Supreme Court of Missouri

Handdown Date: 01/31/2001

Appeal From: Circuit Court of Cole County, Hon. Thomas J. Brown, III

Counsel for Appellant: David M. Harris and John E. Petite

Counsel for Respondent: Michael J. Delaney, Douglas M. Ommen, James B. Deutsch and Marc H. Ellinger

Opinion Summary: The Attorney General issued a civil investigative demand to Ports Petroleum Company on the ground that there was reason to believe Ports engaged in unlawful practices by offering motor fuel for sale at a price below cost to injure competition. The AG sought to enforce the CID, and Ports sought to prohibit enforcement. Ports appeals summary judgment against it.

REVERSED.

Court en banc holds:

The AG has no authority to invoke the CID power conferred by the Merchandising Practices Act to investigate violations of the Motor Fuel Marketing Act.

The Merchandising Practices Act, which outlaws "unlawful practices" in merchandising, permits the use of a CID. The Motor Fuel Marketing Act, which prohibits the sale of motor fuel below cost to injure competition, has no express CID power. To invoke the MPA's CID power, the AG must establish that a violation of the MFMA--a sale of motor fuel below cost with the intent to injure competition--is also an "unlawful practice" under the MPA.

Absent a statutory definition, the Court considers the plain and ordinary meaning of the words, which, in this case, are unrestricted, all-encompassing and exceedingly broad. Application of the statute to the case at bar gives rise to an ambiguity. Given an as-applied ambiguity in the term "unfair practice," this Court draws on the principal rule of statutory construction, which is to ascertain the intent of the legislature. The sales addressed by the MFMA are not those tainted by conventional unfair practices/consumer fraud, which the MPA addresses.

Although it is a close question, the MPA and the MFMA operate independently. The two statutes were not intended to overlap. A sale of motor fuel below cost under the MFMA is not the kind of "unfair practice" encompassed by the MPA.

By resolving the CID issue against the AG, the constitutional issues are no longer ripe for adjudication.

Dissenting opinion summary: The dissenting author would find that the Merchandising Practices Act authorizes the Attorney General to use a civil investigative demand to investigate possible violations of the Motor Fuel Marketing Act. The dissent argues: The term "unfair practice" is not defined in the statute but is broad. A practice that violates the MFMA would fit this definition. It is not necessary to agree with the legislature but to apply the law. There is nothing in the law that prohibits the AG from investigating violations of the MFMA, and in fact it has a duty to do so. Nothing, of course, forbids the AG from investigating the case the way a lawyer would without a CID.

Opinion Author: Stephen N. Limbaugh, Jr., Judge

Opinion Vote: REVERSED. Price, C.J., Covington, White, Holstein and Benton, JJ., concur; Wolff, J., dissents in separate opinion filed.

Opinion:

Plaintiff, Ports Petroleum Company, Inc. of Ohio (Ports), appeals the circuit court's entry of summary judgment in favor of defendants, Attorney General Jeremiah W. Nixon and Missouri Petroleum Marketers Association/Missouri Association of Convenience Stores on Ports' claims for declaratory and injunctive relief. Ports asserts that: (1) the attorney general did not have authority to issue a civil investigative demand (CID) under the Merchandising Practices Act (MPA), sec. 407.010, et seq., RSMo 1994, to investigate alleged violations of the Motor Fuel Marketing Act (MFMA), secs. 416.600 to 416.640, RSMo Supp. 1998; and (2) the MFMA (a) violates the Due Process Clauses of the United States Constitution and article I, section 10 of the Missouri Constitution because it "is not rationally related to its putative goal of enhancing competition in the motor fuel industry;" (b) violates the Equal Protection Clause of the United States Constitution and article I, section 2 of the Missouri Constitution because it "operates in a discriminatory fashion against unbranded retailers [such as Ports] and to the distinct advantage of branded retailers;" and (c) violates the Supremacy Clause of the United States Constitution, because it "irreconcilably conflicts with federal antitrust law." This Court has jurisdiction by virtue of the constitutional challenges to the MFMA. Mo. Const. art. V, sec. 3. Although this Court determines, as will be explained, that the constitutional challenges are not ripe for adjudication, jurisdiction is retained, nonetheless. See Rodriguez v. Suzuki Motor Co., 996 S.W.2d 47, 52 (Mo. banc 1999).

Ports, an independent marketer of generic, unbranded motor fuels, owns and operates one gas station in Missouri, a "Fuel Mart" on I-44 in Franklin County. The attorney general invoked the MPA to serve Ports with a CID on the ground that "there is reason to believe that [Ports has] engaged in or [is] engaging in unlawful practices in connection with the sale or advertisement of the merchandise, to wit: engaging in the unfair practice of offering motor fuel for sale at a price below cost, with the intent to injure competition." Ports challenged the attorney general's authority to issue a CID to investigate suspected MFMA violations by filing a petition to set aside the CID. The attorney general followed with an answer, counterclaim and motion to enforce the CID, all alleging that sales of motor fuel below cost with an intent to injure competition is a violation of the MFMA, which, in turn, is an "unfair practice" under the MPA that warrants use of the CID power. In a separate suit, Ports sought declaratory relief on the constitutional claims outlined above and also requested an injunction to prohibit enforcement of the unconstitutional provisions. The circuit court consolidated the two cases and allowed the Petroleum Marketers and Convenience Store Association to intervene as parties-defendant. Thereafter, the parties filed cross-motions for summary judgment, and the court entered judgment for defendants on all issues.

On appeal, the dispositive first issue, which is entirely a question of law, is whether the attorney general has the authority to invoke the CID power of the MPA to investigate a possible violation of the MFMA. Section 407.020, the substantive component of the MPA, states in pertinent part:

1. The act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce . . . in or from the state of Missouri, is declared to be an unlawful practice. . . .

The CID power, which is defined in relation to the "unlawful practice" of sec. 407.020, is set out in sec. 407.040:

1. When it appears to the attorney general that a person has engaged in or is engaging in any method, act, use, practice or solitication [sic] declared to be unlawful by this chapter . . . he may execute in writing and cause to be served upon any person who is believed to have information, documentary material, or physical evidence relevant to the alleged or suspected violation, a civil investigative demand requiring such person to appear and testify, or to produce relevant documentary material or physical evidence [f]or examination . . . .

In contrast, the substantive part of the MFMA provides:

1. It is unlawful for any person engaged in commerce within this state to sell or offer to sell motor fuel below cost as defined in subdivision (2) of section 416.605, if:

(1) The intent of the sale or offer is to injure competition; or

(2) The intent of the sale or offer is to induce the purchase of other merchandise, to unfairly divert trade from a competitor, or otherwise to injure a competitor.

Unlike the MPA, the MFMA has no express CID power. Therefore, to invoke the MPA's CID power, the attorney general must establish that a violation of the MFMA -- a sale of motor fuel below cost with the intent to injure competition -- is also an "unlawful practice" under the MPA. However, the only category of "unlawful practice" that might encompass the MFMA's proscribed sale of motor fuel below cost is the category of "unfair practice," as respondents concede that Ports has not engaged in deception, fraud, false pretenses, or any other kind of conduct declared to be unlawful under the MPA. Thus, according to Ports' cynical, but accurate account of the situation, "the Attorney General has attempted to secure CID power by slapping an 'unfair practice' label on Ports' alleged sales of motor fuel below cost in an effort to bootstrap his Motor Fuel Act investigation to the Merchandising Practice Act." Whether the attorney general's action is a "sleight-of-hand" to overcome the "obvious lack of statutory authority" as Ports characterizes it, or a valid and obligatory exercise of statutory authority, as the attorney general would have it, can only be resolved by determining the meaning of the term "unfair practice," which unfortunately has no statutory definition.

Absent a statutory definition, this Court considers the plain and ordinary meaning of the words themselves, Budding v. SSM Healthcare System, 19 S.W.3d 678, 680 (Mo. banc 2000), which, in this case, are unrestricted, all-encompassing and exceedingly broad. For better or worse, the literal words cover every practice imaginable and every unfairness to whatever degree. In fact, to reflect...