Thompson v. Jiffy Lube Intern., Inc.

• Citation: 505 F.Supp.2d 907
• Decision Date: 23 April 2007
• Docket Number: No. 05-1203-WEB.,05-1203-WEB.
• Parties: Charolette THOMPSON, Valerie Thompson, Terrence Mcfadgon, Marilyn Bagnall, Myra Jenkins, Laura Harris, Ross Lamm, Mark Hannon, and Thomas Krusinski, individually and on behalf of those similarly situated, Plaintiffs, v. JIFFY LUBE INTERNATIONAL, INC., R and P Enterprises, Inc. d/b/a Jiffy Lube, and Heartland Automotive, Inc., Heartland Automotive II, INC. d/b/a Jiffy Lube, Defendants.
• Court: U.S. District Court — District of Kansas

505 F.Supp.2d 907

Charolette THOMPSON, Valerie Thompson, Terrence Mcfadgon, Marilyn Bagnall, Myra Jenkins, Laura Harris, Ross Lamm, Mark Hannon, and Thomas Krusinski, individually and on behalf of those similarly situated, Plaintiffs, v. JIFFY LUBE INTERNATIONAL, INC., R and P Enterprises, Inc. d/b/a Jiffy Lube, and Heartland Automotive, Inc., Heartland Automotive II, INC. d/b/a Jiffy Lube, Defendants.

No. 05-1203-WEB.

United States District Court, D. Kansas.

April 23, 2007.

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Lawrence W. Williamson, Jr., Uzo L. Ohaebosim, Shores, Williamson & Ohaebosim, LLC, Wichita, KS, for Plaintiffs.

James W. Tippin, Keith A. Cutler, James W. Tippin & Associates, Kansas City, MO, Kenneth P. Held, Paula W. Hinton, Timothy R. Lankau, Vinson & Elkins, LLP, Houston, TX, Mark A. Buck, Fairchild & Buck, P.A., Lawrence, KS, for Defendants.

MEMORANDUM AND ORDER

WESLEY E. BROWN, Senior District Judge.

Now before the Court are Defendants' motions to dismiss, under Rules 12(b)(2), (6), and (7). (Docs.88, 105, 111). In a second amended complaint, Plaintiffs have alleged violations of consumer protection statutes, negligence, and unjust enrichment and have requested injunctive relief and monetary damages. (Doc. 83). The Court has subject matter jurisdiction. 28 U.S.C. § 1332(d)(2).

I. Nature of the Case.

The following allegations are taken from Plaintiffs' second amended complaint. (Doc. 83). Jiffy Lube Incorporated (JLI) is a corporation organized under the laws of the State of Texas and doing business in the State of Kansas and throughout the United States. (Id. ¶ 20). JLI has 2,200 service centers and provides service to more than 30,000,000 automobiles a year. (Id. ¶ 37). JLI requires company owned stores and franchisees to follow a system of standards, policies, and procedures. (Id. ¶ 39).

JLI has negligently trained its personnel by training them to set sales goals for additional items instead of focusing on technical aspects of automobile repair. This training includes tricks to convince customers to purchase unneeded items such as showing the customer the color of fluids when the color is not determinative of the need for repair. (Id. ¶ 43). JLI also trains its managers to recommend the manufacturers' recommendations for severe conditions without inquiring into the driving habits of the customer. (Id. ¶¶ 42, 43). JLI visits its franchisees to analyze their operations. If JLI finds a franchisee deficient, it requires managers to implement remedial action. (Id. ¶ 44).

JLI has also made deceptive claims that its technicians are certified. (Id. ¶ 48). JLI makes no distinctions between company and franchise owned stores. However, JLI does not state the type of certification received and it gives the impression that its technicians are certified to the Automotive Service Excellence (ASE) standards. (Id. ¶ 50). However, JLI is not ASE certified and technicians are trained by JLI instructed managers. (Id.). In its website, JLI states that its technicians receive exhaustive classroom, video, and hands-on training in every service offered; however, few if any technicians actually undergo mechanical or classroom training. (Id.). JLI hires technicians and managers with no mechanical experience. (Id. ¶¶ 51, 52).

JLI has made false statements by representing that it does not endorse any policy that places sales targets on customer purchases when it does. (Id. ¶¶ 55, 56). JLI's compensation policy shows that employees of JLI owned stores receive points and bonuses based on the number of additional items that are sold. (Id.).

JLI makes deceptive service recommendations through a software program called "Ottocare". (Id. ¶ 58). This software program is implemented through the Jiffy Lube Point of Sale Computer System (POS). (Id.). The POS only includes information that was approved and implemented by JLI. (Id.). JLI requires franchisees to make service recommendations based on severe conditions, regardless of the customer's driving habits. (Id. ¶ 57). This practice is deceptive because: (a) OttoCare does not actually contain true manufacturer recommendations for severe conditions, which vary by manufacturer; (b) JLI utilizes one definition to define severe conditions which includes ordinary activities such as driving in stop and go traffic and driving at prolonged higher engine speeds; furthermore, this definition is different from the manufacturers' definitions of severe condition; (c) JLI does not train or allow its technicians to determine whether a vehicle is truly driven under severe conditions. (Id. ¶¶ 58, 64). The POS also fails to consider whether the car was serviced by anyone prior to the time the vehicle was brought to Jiffy Lube; furthermore, based on its own surveys, JLI knows that many customers are not severe drivers. (Id. ¶ 62). As a result, JLI knows that its Ottocare program makes recommendations that are not needed. (Id.).

JLI's sales goals of additional items cause deceptive practices. JLI provides sales quotas, commissions, goals, and sales training for all company and franchise owned stores. (Id. ¶ 81). JLI does not train its employees to inform the customers that they receive a bonus for selling additional items or that there are goals set for the purchase of additional items. (Id.). This is deceptive because it misleads the consumer to believe that the technicians are making recommendations that are in the best interests of the consumer. (Id.). JLI does not penalize technicians for pressuring customers, despite the fact that over 80% of surveyed customers report feeling pressured to buy additional items. (Id. ¶ 83). Technicians receive a monthly incentive bonus based on goals and ticket average. (Id. ¶ 84). JLI requires technicians to concentrate heavily on the "Dollars over Base" (DOB). (Id. ¶ 85). A ticket is the term used by defendants to refer to each vehicle's bill and base is when the ticket is $29.99. (Id.). JLI requires technicians to ensure the tickets reach $30.00 over base. (Id.). JLI will suspend technicians a week without pay for failing to meet DOB goals for the month. (Id. ¶ 87). To avoid penalties, employees pressure customers and misrepresent the need for additional services. (Id. ¶ 88). JLI's system puts technicians under so much pressure to make sales and to conduct service quickly that they negligently perform the actual mechanical services. (Id. ¶ 95).

JLI and franchisees have imposed an environmental surcharge or shop fee of $1.99. (Id. ¶¶ 97, 99). This fee implies that it is government mandated but JLI and the franchisees keep the entire amount of the fee. Although JLI has entered into a settlement agreement to cease charging the environmental fee, JLI has simply renamed the environmental fee as a shop fee and has continued to charge the $1.99.

Charolette Thompson (Thompson) is a Kansas resident and visited Jiffy Lube # 54 (JL 54) in Wichita, Kansas on September 9 and November 2 of 2004; June 13 and October 22 of 1998; September 24 and October 25 of 1999; August 30, 2001; January 23, April 24, and December 14 of 2002; and May 28, October 23, and October 24 of 2003. (Id. ¶¶ 8, 103, 105, 107, 110, 113, 114, 116, 117, 118, 121, 122, 124, 125, 127, 128, 130). This Jiffy Lube is a franchise owned by R & P Enterprises, which does business in Kansas. (Id. ¶¶ 17, 108).

On several occasions, JL 54 made service recommendations to Thompson based on the Ottocare system without having inquired into Thompson's driving habits. (Id. ¶¶ 109). Based on these deceptive recommendations, Thompson purchased additional services, some of which were unnecessary according to the manufacturer's recommendations. (Id. ¶¶ 111, 113, 123, 131). The employee failed to inform Thompson that he would receive a commission for purchases Thompson made. (Id. ¶ 103). Additionally, Thompson was charged and paid the $1.99 environmental fee. (Id. ¶ 132). Thompson alleges technicians at the R & P owned franchise incorrectly changed the oil filter and transmission fluid, which resulted in damages to her vehicles. (Doc. 83 ¶¶ 134, 138). These damages are the result of negligence, poor training and the hurried manner in which technicians perform services to meet the goals set by JLI. (Id. ¶¶ 133, 134, 138).

Terrence McFadgon (McFadgon) is a resident of Tennessee and he visited JLI franchises owned by Heartland Automotive (Heartland) in Tennessee. (Id. ¶¶ 10, 18, 19, 140, 141 143). Heartland is the largest Jiffy Lube franchisee and has locations in Kansas. (Id. ¶ 18). On several occasions, Heartland's franchises made recommendations based on the Ottocare system without having first inquired about McFadgon's driving habits. (Id. ¶ 145). These recommendations included purchasing additional items that were not recommended by the manufacturer. (Id.). The technicians did not inform McFadgon of the commission and goal system. (Id.). As a result of these recommendations, McFadgon purchased additional unneeded services. (Id.). McFadgon also paid the $1.99 environmental fee. (Id. ¶ 100). McFadgon makes no allegations of negligence.

Plaintiffs Valerie Thompson (V.Thompson), Marilyn Bagnall (Bagnall), Myra Jenkins (Jenkins), Laura Harris (Harris), Ross Lamm (Lamm), Mark Hannon (Hannon), and Thomas Krusinski (Krusinski) make similar allegations of negligence and unlawful business practices. (Id. at 32-56).

II. Improper addition of parties.

Defendants argue that V. Thompson, Bagnall, Jenkins, Harris, Lamm, Hannon, and Krusinski were improperly added. Defendants argue Plaintiffs' addition of seven plaintiffs to the complaint is improper under Rule 21; however, the Tenth Circuit has held that "Rule 15(a) governs the addition of a party ... because it is actually a motion to amend." United States ex rel. Precision Co. v. Koch Indus., Inc., 31 F.3d 1015, 1018 (10th Cir.1994).

Rule 15(a) states:

A party may amend the party's pleading once as a matter of course at any time before a...