Standard Petroleum Co. v. Faugno Acquisition, LLC

• Decision Date: 28 August 2018
• Docket Number: SC 19874, (SC 19875)
• Citation: 330 Conn. 40,191 A.3d 147
• Court: Connecticut Supreme Court
• Parties: STANDARD PETROLEUM COMPANY v. FAUGNO ACQUISITION, LLC, et al. Kennynick, LLC, et al. v. Standard Petroleum Company

330 Conn. 40

191 A.3d 147

STANDARD PETROLEUM COMPANY

v.FAUGNO ACQUISITION, LLC, et al.

Kennynick, LLC, et al.

v.Standard Petroleum Company

SC 19874, (SC 19875)

Supreme Court of Connecticut.

Argued December 14, 2017

Officially released August 28, 2018

Mary E. R. Bartholic, with whom was Thomas W. Witherington, Hartford, for the appellant (plaintiff in Docket No. SC 19874 and defendant in Docket No. SC 19875).

John J. Morgan, for the appellees (named defendant in Docket No. SC 19874 and plaintiffs in Docket No. SC 19875).

Palmer, McDonald, Robinson, D'Auria, Mullins and Kahn, Js.^*

McDONALD, J.

Standard Petroleum Company, the counterclaim defendant and the defendant, respectively, in the two cases that comprise this consolidated action (defendant), appeals from the trial court's orders certifying class actions against it. The class actions are premised on allegations that the defendant overcharged service station operators and franchisees for gasoline products.¹ Generally, the defendant claims that the trial court abused its discretion in certifying the class² because it failed to apply the "rigorous analysis" that is required before such a certification may be granted. In particular, the defendant claims that the trial court's error is most clearly evidenced by its failure to address various elements of the causes of action and the special defenses when it determined that common issues predominated. We conclude that the defendant has failed to establish that the trial court abused its discretion in ordering class certification.

The record reveals the following facts, assumed to be true by the trial court for purposes of the certification issues or otherwise undisputed, and procedural history. Kennynick, LLC, and Faugno Acquisition, LLC (Faugno)³ (collectively, plaintiffs),⁴ are service station operators and were franchised dealers for gasoline products supplied by the defendant, which is a wholesale supplier. In 2009, the plaintiffs commenced an action against the defendant, purportedly on behalf of themselves and other persons who had been supplied with gasoline products by the defendant. The complaint alleged that the proposed class members had been overcharged in two respects. First, it alleged that the defendant had charged class members the federal gasoline tax at a rate of 18.4 cents per gallon without applying a federal tax credit that would have had the effect of reducing that rate and that had been effective between January 1, 2005 and December 31, 2011.⁵ Second, it alleged that, at all relevant times since September 27, 2004, the defendant had charged class members the Connecticut gross receipts tax on the basis of the price of gasoline as delivered, and thus had improperly charged for state tax on the defendant's profit (including the federal tax overcharge) and delivery. In reliance on these allegations, the six count complaint set forth claims of (1) breach of contract, (2) unjust enrichment, (3) violation of the Connecticut Petroleum Franchise Act, General Statutes § 42-133j et seq., (4) violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., (5) violation of the good faith requirement under the Uniform Commercial Code, General Statutes § 42a-2-305 (2), and (6) misrepresentation.⁶ The plaintiffs sought relief including money damages for past losses, injunctive relief prohibiting the defendant from conduct that would cause future losses, and punitive damages.

Shortly thereafter, the defendant commenced a separate action against one of the plaintiffs, Faugno, alleging breach of contract.⁷ In response, Faugno filed a counterclaim, also styled as a proposed class action, which in all material respects mirrored the plaintiffs' complaint in the earlier action. Pursuant to the plaintiffs' motions, and in the absence of objection from the defendant, the trial court consolidated the two actions.⁸

In 2015, after the plaintiffs had obtained compliance with discovery requests, they moved for orders certifying the action as a class action pursuant to Practice Book § 9-9.⁹ The defendant filed an opposition, which included a supporting affidavit by its vice president. The trial court held a hearing on the motion and reserved decision. Thereafter, the trial court issued orders certifying a class action on all counts. The orders defined the class as "all entities or persons who: (i) purchased gasoline from [the defendant] during the period September 27, 2004 to date; (ii) were charged federal gasoline tax at a rate of 18.4 cents per gallon on such gasoline purchases; (iii) did not receive the federal ... tax credit, while it was in effect, on such gasoline purchases; and (iv) were charged state gross receipts tax on such gasoline purchases based on the price of gasoline, as delivered." The orders also approved the plaintiffs as class representatives and their counsel as class counsel. The orders indicated that further articulation would follow.

The trial court thereafter issued a memorandum of decision setting forth that articulation, which we explore in fuller detail later in this opinion. In that decision, the trial court noted that the plaintiffs had identified at least eighty-one of the defendant's gasoline customers during the relevant time period as potential members of the proposed class: forty-four had supply contracts with the defendant and thirty-seven had purchased gasoline on an as invoiced basis. With regard to those with written contracts, there were four subclasses with varied arrangements, but all contracts contained an identical provision stating that the "prices include taxes ... which [the defendant] may be required to collect or pay pursuant to any present or future laws ...." The court pointed to the fact that all of the potential class members had received invoices from the defendant. The court noted that the plaintiffs had reviewed "a ‘substantial sampling’ of the more than 14,000 invoices produced by [the defendant] in discovery" and had represented that "the invoices appear to be almost identical to the invoices that the [plaintiffs] received for payment." The court addressed separately each requirement for class certification under Practice Book § 9-7, concluding that each had been satisfied. Largely in reliance on the facts and legal issues cited in that analysis, the court also concluded that each of the policy considerations under Practice Book § 9-8 weighed in favor of allowing the action to proceed as a class action.

The defendant appealed from the orders certifying the class. See footnote 1 of this opinion. After the court issued its memorandum of decision, the defendant did not seek any further articulation.

On appeal, the defendant contends that the trial court abused its discretion in granting class certification because it failed to apply the requisite "rigorous analysis" to each class certification requirement. Instead, the defendant contends, the trial court merely required " ‘some showing’ " to support each requirement, engaged in a "cursory review of the claims and evidence," and disregarded certain evidence, elements, and defenses. We conclude that, in light of the claims and arguments advanced to the trial court, its grant of class certification was not an abuse of discretion.

I

Given the nature of the defendant's claims, a discussion of the applicable standards that guide our review takes on heightened significance. Therefore, clarifying certain aspects of these standards must be our starting point.

"[T]he rules of practice set forth a two step process for trial courts to follow in determining whether an action or claim qualifies for class action status. First, a court must ascertain whether the four prerequisites to a class action, as specified in Practice Book § 9-7, are satisfied. These prerequisites are: (1) numerosity—that the class is too numerous to make joinder of all members feasible; (2) commonality—that the members have similar claims of law and fact; (3) typicality—that the [representative] plaintiffs' claims are typical of the claims of the class; and (4) adequacy of representation—that the interests of the class are protected adequately....

"Second, if the foregoing criteria are satisfied, the court then must evaluate whether the certification requirements of Practice Book § 9-8 [3] are satisfied.

These requirements are: (1) predominance—that questions of law or fact common to the members of the class predominate over any questions affecting only individual members; and (2) superiority—that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." (Internal quotation marks omitted.) Neighborhood Builders, Inc. v. Madison , 294 Conn. 651, 658, 986 A.2d 278 (2010).

It is the class action proponent's burden to prove that all of the requirements have been met. Id., at 656–57, 986 A.2d 278. To determine whether that burden has been met, we have followed the lead of the federal courts; see General Telephone Co. of the Southwest v. Falcon , 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed. 2d 740 (1982) ; directing our trial courts to undertake a " ‘rigorous analysis.’ " Neighborhood Builders, Inc. v. Madison , supra, 294 Conn. at 656, 986 A.2d 278 ; Marr v. WMX Technologies, Inc. , 244 Conn. 676, 680, 711 A.2d 700 (1998) ; see also Collins v. Anthem Health Plans, Inc. , 275 Conn. 309, 322–23, 880 A.2d 106 (2005) ("[b]ecause our class certification requirements are similar to those embodied in rule 23 of the Federal Rules of Civil Procedure, and our jurisprudence governing class actions is relatively undeveloped, we look to federal case law for guidance in construing the provisions of Practice Book §§ 9-7 and 9-8" [footnote omitted] ).

We have not previously articulated with any specificity what a "rigorous analysis" by the trial court necessarily entails. Although some of the defendant's specific concerns are addressed in the sections that follow, there are certain overarching...