STATE OF MINN. BY HUMPHREY v. Standard Oil Co.

• Decision Date: 29 July 1983
• Docket Number: Civ. No. 4-80-461.
• Citation: 568 F. Supp. 556
• Parties: STATE OF MINNESOTA, by its Attorney General, Hubert H. HUMPHREY, III, and State of New York, by its Attorney General, Robert Abrams, and its Energy Commissioner, James L. Larocca, Plaintiffs, v. STANDARD OIL COMPANY, (INDIANA), Defendant.
• Court: U.S. District Court — District of Minnesota

568 F. Supp. 556

STATE OF MINNESOTA, by its Attorney General, Hubert H. HUMPHREY, III, and State of New York, by its Attorney General, Robert Abrams, and its Energy Commissioner, James L. Larocca, Plaintiffs, v. STANDARD OIL COMPANY, (INDIANA), Defendant.

Civ. No. 4-80-461.

United States District Court, D. Minnesota, Fourth Division.

July 29, 1983.

COPYRIGHT MATERIAL OMITTED

Jerome L. Getz, Deputy Atty. Gen., St. Paul, Minn., for plaintiffs State of Minn.

Stanley B. Klimberg, Albany, N.Y., Kenneth Robinson, Asst. Atty. Gen., New York City, for plaintiff State of N.Y. and its Energy Com'r.

Dale I. Larson, Minneapolis, Minn., Thomas Gottschalk and Stephen Herman, Kirland & Ellis, Washington, D.C., M.J.H. Keating, Chicago, Ill., for defendant.

MEMORANDUM ORDER

MAGNUSON, District Judge.

A hearing was held before the undersigned on the motion of defendant Standard Oil Company of Indiana for dismissal of the complaint of plaintiffs State of Minnesota and State of New York, pursuant to Fed.R. Civ.P. 12(b)(1) and 12(b)(6).

Jerome L. Getz, Deputy Attorney General for the State of Minnesota, and Brad Engdahl, Special Assistant Attorney General for the State of Minnesota, appeared on behalf of the plaintiffs. Thomas Gottschalk, Esq., Dale Larson, Esq., David G. Norrell, Esq., and Paula Clayton, Esq., appeared on behalf of the defendant.

This action initially began on September 5, 1980, upon the filing of a four-count civil action against Standard Oil Company of Indiana (Standard) and the U.S. Department of Energy (DOE) by the State of Minnesota and the State of New York. Count I of the complaint alleges that Standard failed to comply with federal petroleum price and allocation regulations, thereby overcharging plaintiffs for petroleum products. Counts II-IV allege that Standard and DOE entered into an unlawful settlement of DOE enforcement disputes. Upon a motion by defendants, Counts II-IV were dismissed by order of the court. State of Minnesota v. Standard Oil Co., 516 F.Supp. 682 (D.Minn.1981).

Subsequently, defendant Standard moved to dismiss Count I of the complaint, pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). Numerous briefs were submitted, and the motion heard on February 26, 1982; the matter was then taken under advisement. Since that time, plaintiff Minnesota has amended its complaint, to which Standard has renewed its motion to dismiss, and both plaintiff Minnesota and defendant Standard have submitted supplemental briefs and materials. Furthermore, plaintiff States and defendant DOE have stipulated and agreed that plaintiffs would dismiss their actions against DOE and its officials, Standard Oil thus remaining as the sole defendant in this action. See "Stipulation and Order dismissing U.S. Department of Energy, Donald P. Hodel and Milton Lorenz as Defendants," April 21, 1983, in this case.

THE COMPLAINT

Plaintiffs Minnesota and New York bring a civil action against defendant Standard for alleged violations of the Phase IV Petroleum Price Regulations, 6 C.F.R. Part 150, Subpart L. This action is brought pursuant to section 210 of the Economic Stabilization Act of 1970, as amended (ESA), 12 U.S.C. § 1904 (note), as incorporated by reference in the Emergency Petroleum Allocation Act, 15 U.S.C. § 754(a)(1).

Plaintiff New York brings its action on behalf of both the State and its political subdivisions who, in their proprietary capacity, were allegedly overcharged in purchases from Standard in violation of the applicable petroleum price regulations. New York further seeks recovery as parens patriae, on behalf of State citizens allegedly overcharged by Standard. In both instances, New York seeks recovery from Standard for alleged overcharges in direct purchases from Standard and in purchases of Standard products from sellers other than Standard. New York seeks recovery of overcharges and damages authorized under ESA § 210 for alleged overcharges occurring from March 6, 1973, through December 31, 1979.

Plaintiff Minnesota seeks similar recovery on behalf of itself, its political subdivisions, and its citizens. Additionally, Minnesota seeks recovery for alleged injury to general interests of the State caused by the alleged overcharges. Furthermore, as authorized by ESA § 210(b), Minnesota seeks treble damages and recovery of attorneys' fees and costs for alleged intentional overcharges made by Standard. Minnesota seeks recovery for alleged non-willful overcharges for the period March 6, 1973, through December 31, 1979, and for alleged intentional overcharges from March 6, 1973, through the present.

DISCUSSION

Although defendant Standard has not objected to plaintiff Minnesota's amendment of its complaint, the court will comment upon the pleadings.

Plaintiff Minnesota may, as a matter of right, amend its pleading. Fed.R. Civ.P. 15(a) states, "a party may amend its pleading once as a matter of course at any time before a responsive pleading is served." A motion to dismiss is not a responsive pleading, within the meaning of Rule 15. See 3 J. Moore, Moore's Federal Practice ¶ 15.072 (2d ed. 1983). Although a motion to dismiss has been made, if the motion has not yet been granted, a pleading may be amended. St. Michael's Convalescent Hospital v. State of California, 643 F.2d 1369 (9th Cir.1981).

In the case at hand, Standard has not yet served a responsive pleading to plaintiffs' complaint. Further, Minnesota amended its complaint prior to a determination by the court on Standard's motion to dismiss. Consequently, Minnesota may amend its pleading as a matter of right. Minnesota's complaint, then, is that embodied in its amended pleading, while that of plaintiff New York remains embodied in the original pleading.

Defendant Standard moves for dismissal of plaintiffs' complaints on five grounds. First, Standard asserts that plaintiff New York's complaint should be dismissed for that State's having failed to present Standard with a bona fide claim for refund before initiation of the present action, as required by the ESA. Standard moves for dismissal of Minnesota's claims of non-willful overcharges on similar grounds.

Second, Standard maintains that Minnesota's claims for intentional overcharges should be dismissed for having failed to meet the ESA's requirements for commencement of an intentional overcharge action.

Third, Standard claims that neither Minnesota nor New York has legal authority to bring this action and recover damages on behalf of its citizens.

Fourth, Standard argues that under the ESA, plaintiff States may not attempt to recover from Standard for alleged overcharges which arose in purchases of Standard products made from sellers other than Standard.

Finally, Standard claims that plaintiff States' statutes of limitations significantly bar recovery of the alleged overcharges.

These five grounds will now be considered.

I. Bona Fide Refund Claim Requirement

ESA § 210(b) provides that where an overcharge

is not willful within the meaning of section 208(a) of this title, no action for an overcharge may be brought by or on behalf of any person unless such person has first presented to the seller or renter a bona fide claim for refund of the overcharge and has not received repayment of such overcharge within ninety days from the date of the presentation of such claim.

Plaintiff New York fails to meet this requirement. Consequently, its complaint must be dismissed. Plaintiff Minnesota's claims of non-willful overcharges meet this requirement only in part. Accordingly, Minnesota's claims of non-willful overcharges are partially dismissed.

New York does not assert a willful violation of the ESA by Standard. Therefore, a bona fide claim for refund is a condition precedent to an action for alleged overcharges under ESA § 210. Manning v. University of Notre Dame Du Lac, 484 F.2d 501, 503-504 (TECA 1973). New York, however, has not fulfilled this requirement. Although New York presented Standard with a claim for refund, the claim was postmarked three days after New York filed its complaint. Furthermore, New York failed to allow Standard ninety days in which to make repayment of overcharges, as prescribed by the ESA.

New York does not contest this. Rather, it maintains that it should be excepted from the claim requirement. New York asserts that since Standard did not respond to Minnesota's claim for repayment, any claim by New York for repayment would be futile. Consequently, the requirement should be waived.

Plaintiff New York correctly notes that no court has dealt with a question of this exact nature before. However, the Temporary Emergency Court of Appeals (TECA), created in ESA § 211(b)(1) to function as a circuit court of appeals with respect to the ESA, has consistently required strict compliance with ESA § 210(b). Where a seller has not willfully violated the ESA, the court has held that a purchaser's request for refund of overcharges is mandatory. Id. at 503. Substantial compliance with § 210 is not sufficient; strict compliance is required. Dempsey v. Rhodes Oil Co., 620 F.2d 274, 276-277 (TECA 1980). Moreover, the court has stated that the ESA "does not excuse failure to present a claim for refund simply on a conclusion that it would have been futile." Longview Refining Co. v. Shore, 554 F.2d 1006, 1012 n. 17 (TECA 1977), cert. denied, 434 U.S. 836, 98 S.Ct. 126, 54 L.Ed.2d 98 (1977).

New York does not challenge or distinguish these cases, nor does it present authority which directly supports its proposition that the claim requirement be waived. Instead, it purports to find an analogy in an exception to the doctrine of the exhaustion of administrative remedies. Cases which New York cites, however, are neither on point nor do they run counter to the findings of TECA. They reflect, at best, exceptions due to urgent or extreme circumstances, neither of which is present in the instant action. As a result, New York fails to establish a basis for waiver of the claim request...