Opinion
Case No. 4:00CV1903 TIA.
March 30, 2005
MEMORANDUM AND ORDER
This matter is before the Court on defendants' Motion to Dismiss and to Strike Directed at Plaintiffs' Amended and Restated Complaint (Docket No. 180/filed July 9, 2004); plaintiffs' Motion to Compel Defendants' Initial Disclosures (Docket No. 158/filed May 14, 2004), defendants' Motion to Show Cause (Docket No. 195/filed August 20, 2004); plaintiffs' Cross-Motion to Compel (Docket No. 204/filed September 2, 2004); and plaintiffs' Emergency Motion for This Court to Have a Hearing to Amend the Case Management Order to Extend Discovery Deadlines (Docket No. 232/filed December 1, 2004). The parties have responded to the pending motions. All matters are pending before the undersigned United States Magistrate Judge, with consent of the parties, pursuant to 28 U.S.C. § 636(c).
I. Factual Background
The factual background for purposes of resolving the instant motions is based on facts taken from the Amended and Restated Complaint, the Orders entered by the undersigned, and the briefs filed by the parties in support and in opposition to the pending motions, and the exhibits attached thereto. Plaintiffs are current or former operators of Shell retail gas stations in the St. Louis area who purchase or purchased all of the gasoline sold at such stations from defendant Shell Oil Company, or later, Equilon. Plaintiffs operated their stations pursuant to written dealer agreements with Shell. The agreements required defendants to provide plaintiffs with equal pricing for motor fuel. In 1998, Shell assigned to Equilon most of the agreements with plaintiffs and thereafter the annual agreements were with Equilon. Effective July 1, 1998, Shell Oil Company and Texaco transferred their combined U.S. marketing and refining assets for the area west of the Appalachian mountains to Equilon. Equilon is engaged in the business of selling gasoline, diesel fuel and other petroleum products to independent dealers.
Plaintiffs originally filed their Petition in Missouri state court, seeking damages for violation of the Missouri Motor Fuel Marketing Act ("MMFMA"), the Missouri Uniform Commercial Code, implied covenant of good faith and fair dealing, breach of contract, negligent misrepresentation, and fraudulent misrepresentation. Defendants removed the case to this court, and the undersigned denied plaintiffs' Motion to Remand, finding that one of the defendants, Paul Bischler, had been fraudulently joined to defeat diversity jurisdiction.
Defendants then moved to dismiss the petition contending that plaintiffs had released any potential claims and that the claims were untimely filed. On February 7, 2002, the undersigned granted defendants' motion in part, dismissing certain plaintiffs for lack of standing to sue, limiting the time frame within which viable claims could arise, and dismissing several portions of the petition including: the failure to set a transfer price claim, part of the MMFMA count, the negligent misrepresentation claims, the fraudulent misrepresentation claims, the implied covenant of good faith and fair dealing claims. The undersigned declined to rule on the issue of whether plaintiffs had released their claims until the evidentiary stage of these proceedings and invited plaintiffs to amend their complaint to include factual allegations supporting their claim that the releases were unenforceable.
The undersigned dismissed all MMFMA claims arising prior to October 10, 1996, and all UCC claims arising prior to October 10, 1999, in accordance with the applicable statute of limitations.
Plaintiffs filed an amended three-count Complaint alleging that their lease and supply agreements with defendants required the oil companies to provide plaintiffs with equal pricing for gasoline. Additionally, plaintiffs claim that the agreements mandated that the price plaintiffs paid for gasoline would be the dealer price in effect at the time loading commenced. Plaintiffs further allege that under Missouri law, defendants were required to offer the same price to all dealers in a given market, but that defendants did not comply with the pricing terms of the contracts or with Missouri law. Plaintiffs averred that defendants never intended to charge the dealers the same prices, but instead charged dealers different prices than provided for in the agreements. Specifically, plaintiffs contended that defendants did not abide by representations made by their agents, that defendants engaged in discriminatory pricing by selling gasoline for less to stations controlled by defendants, that defendants charged the plaintiffs higher prices for gasoline than other wholesalers were charging, that defendants did not offer equal rebates and discounts to all dealers, that defendants set rent rates arbitrarily and in bad faith after discontinuing the Variable Rent Program, and that plaintiffs paid more for gasoline than they should have and therefore suffered substantial losses. Finally, plaintiffs contended that the releases executed by certain plaintiffs with Shell and Equilon are void.
Defendants then moved to dismiss the amended complaint contending that plaintiffs had released any potential claims and that the claims were untimely filed. On February 7, 2002, the undersigned granted defendants' motion in part, dismissing certain plaintiffs for lack of standing to sue, limiting the time frame within which viable claims could arise, and dismissing several portions of the petition including: the failure to set a transfer price claim, part of the MMFMA count, the negligent misrepresentation claims, the fraudulent misrepresentation claims, the implied covenant of good faith and fair dealing claims. In relevant part, the undersigned opined
The undersigned dismissed all MMFMA claims arising prior to October 10, 1996, and all UCC claims arising prior to October 10, 1999, in accordance with the applicable statute of limitations.
Plaintiffs filed their petition on October 10, 2000. Any MMFMA claims arising more than four years before this date are time barred. Similarly, plaintiffs' UCC claims . . . are limited to incidents and events occurring after October 10, 1999. According to plaintiffs' petition, several plaintiffs ended their leases with defendants prior to October 10, 1999.
The undersigned declined to rule on the issue of whether plaintiffs had released their claims until the evidentiary stage of these proceedings and invited plaintiffs to amend their complaint to include factual allegations supporting their claim that the releases were unenforceable. Plaintiffs filed an amended three-count Complaint and defendants moved to strike and dismiss the amended complaint.
On January 14, 2003, the undersigned denied defendants' motion in part finding that plaintiffs' Amended Complaint contains factual allegations sufficient to support their assertion the termination of the Variable Rent Program and defendants' fuel pricing and rent practices created adverse conditions amounting to duress. The undersigned dismissed plaintiffs' claims for emotional distress and mental anguish and rejected plaintiffs' argument that the statutes of limitations were tolled due to fraudulent concealment finding that plaintiffs should have raised this argument when the parties originally briefed the limitations issue. The Court opined that the statute of limitations would be enforced in accordance with the Court's previous order. In relevant part, the Court made the following determination with respect to the tolling of the statutes of limitations:
In its previous order, the undersigned dismissed all the MMFMA claims arising prior to October 10, 1996 and all UCC claims arising prior to October 10, 1999, in accordance with applicable statutes of limitation. Plaintiffs are now attempting to argue that the statutes of limitation were tolled due to fraudulent concealment. The court rejects this argument because it should have been raised when the parties originally briefed the limitations issue. The statutes of limitation will be enforced in accordance with the court's previous order.
On May 26, 2004, plaintiffs filed an Amended and Restated Complaint alleging violations of the MMFMA (Count I), the Missouri Uniform Commercial Code (Count III), and the Robinson-Patman Act (Count VI), and breach of contract (Count II), fraudulent suppression (Count IV), misrepresentation and fraud (Count V), and intentional interference of contractual business relations (Count VII). In the Amended and Restated Complaint, plaintiffs assert claims of new plaintiffs, Dan Dierzbicki — 3518 South Grand Avenue, 7449 Olive Street Road, and 14804 Clayton Road; Ajay Kansal — 7449 Olive Street Road; WAM Development, Inc. — 1310 North Grand; Easton Tire Company of Florissant, Inc. d/b/a Wildwood Shell — 14804 Clayton Road; and Reginald Williams and REW Gas Oil, Inc. — 8880 North Broadway.
On September 21, 2004, plaintiffs moved to voluntarily dismiss Reginald Williams and REW Gas Oil, Inc. (Docket No. 214) because plaintiffs learned that Reginald Williams and REW Gas Oil, Inc. did not operate a Shell-branded station at the listed addresses. On October 28, 2004, the Court granted plaintiffs' Motion to Voluntarily Dismiss Plaintiffs Reginald Williams and REW Gas Oil, Inc. (Docket No. 221).
In the Motion to Dismiss and to Strike, defendants move to dismiss those plaintiffs who lack standing to assert claims against defendants; to dismiss those claims that are time-barred; to strike certain allegations including allegations which purport to expand the relevant geographic market to include the entire State of Missouri and a two hundred fifty-mile radius, to strike allegations regarding purchase of motor fuel by jobber-owned and operated stations, and to strike allegations regarding the purchase of motor fuel by joint ventures owned or operated by defendants; and to dismiss Counts IV through VII. In particular, defendants contend that the Court has already determined the scope of the relevant geographic market, the St. Louis area, the relevant level of competition, dealer to dealer, and the relevant applicable statute of limitations. Defendants contend that plaintiffs' state law claims for common law fraud and tortious interference are barred by the economic loss doctrine. Defendants further argue that the new tort claims asserted in Count IV (fraudulent suppression), Count V (fraudulent misrepresentation) and Count VII (tortious interference), are barred by the economic loss doctrine. In the alternative, defendants argue that plaintiffs' fraudulent suppression claim is fatally defective because defendants owed no duty to disclose the allegedly suppressed marketing strategy to plaintiffs inasmuch as no duty to disclose exists in an arms-length commercial transaction. In the alternative, defendants contend that the fraudulent misrepresentation claim fails inasmuch as the allegedly fraudulent statements are mere opinion, puffery, and sales talk that cannot support an actionable fraud claim under Missouri law. In the alternative, defendants argue that the tortious interference count must fail because plaintiffs allege conduct directed at plaintiffs, not plaintiffs' customers, and Missouri case law has never recognized a tortious interference claim based on conduct directed at plaintiffs, not plaintiffs' customers. Next, defendants contend that Count VI fails to meet the pleading standards for a Robinson-Patman Act claim because plaintiffs' general and conclusory allegations of price discrimination fail to meet the pleading standards of a claim under the Act. Defendants request the Court to either dismiss Count VI or, in the alternative, require each individual plaintiff to replead his or her Robinson-Patman Act claim to identify the alleged favored purchasers with which he or she competes and the approximate time frame of the alleged discriminatory treatment. Defendants further argue that the claims of the newly-added plaintiffs, Dan Dierzbicki, Ajay Kansal, WAM Development, Inc., and Easton Tire Company of Florissant, Inc. d/b/a Wildwood Shell, do not relate back to the original filing date and thus the claims asserted by the newly-added plaintiffs should either be limited or barred by the applicable limitations period. In the alternative, defendants contend that the newly-added plaintiffs cannot assert fraudulent concealment to toll the statute of limitations inasmuch as the Court has previously determined that the plaintiffs cannot assert fraudulent concealment to toll the statute of limitations. In the alternative, defendants argue that if the Court accepts plaintiffs' tolling argument, plaintiffs' claims of fraudulent concealment would fail as a matter of law as to their MMFMA and UCC claims because, under Missouri law, the doctrine of fraudulent concealment is inapplicable to the MMFMA and the UCC claims. Defendants note that both the MMFMA and the UCC contain special statutes of limitations and neither provides a basis for tolling its limitations period. Defendants also request that the Court strike plaintiffs' allegations regarding purchasers other than at the retail level of distribution. Defendants contend that the allegations relating to jobber pricing, the prices charged for unbranded motor fuel, and the prices charged to joint ventures are irrelevant to plaintiffs' UCC and breach of contract pricing claims.
II. Discussion
A. Motion to Dismiss and to Strike Directed at Plaintiffs' Amended and Restated Complaint
When ruling on a motion to dismiss, the Court must take the allegations of the complaint as true, construing the complaint and all reasonable inferences in the light most favorable to plaintiff. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). A motion to dismiss should not be granted unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Coleman v. Watt, 40 F.3d 255, 258 (8th Cir. 1994). "The issue is whether, taking all well-pleaded factual allegations in the complaint to be true, the complaint states a claim that would entitle the plaintiff to relief against the defendants under some set of facts." Webb v. Lawrence County, South Dakota, 144 F.3d 1131, 1136 (8th Cir. 1998) (emphasis added).
Ordinarily, an earlier legal holding in the same case would be the "law of the case" and would prevent relitigation of the issue to ensure uniformity of decisions, to protect the expectation of the parties, and to promote judicial economy. See Arizona v. California, 460 U.S. 605, 618 (1983) (law of case doctrine posits "when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case"). Nonetheless, the Court is not bound to follow law of the case when the Court enters an interlocutory order inasmuch as the doctrine of law of the case is applicable only to final judgments. Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co., 48 F.3d 1066, 1070 (8th Cir. 1995). Thus, this Court has "the inherent power to reconsider and modify an interlocutory order any time prior to the entry of judgment." Id. (citingLovett v. General Motors Corp., 975 F.2d 518, 522 (8th Cir. 1992)). As such, the Court will adhere to its earlier decisions regarding the applicable statute of limitations with respect to plaintiffs' MMFMA and UCC claims in Counts I, II, and III, and fraudulent concealment.
Defendants move to dismiss the claims of the new plaintiffs whose dealer agreements ended prior to the statute of limitations set forth by the Court in the Order of February 7, 2002. In that Order, the Court opined that "[a]ny MMFMA claims arising more than four years before [October 10, 1999, the date plaintiffs filed their petition] are time barred. Similarly, plaintiffs' UCC claims . . . are limited to incidents and events occurring after October 10, 1999." Memorandum and Order of February 7, 2002, (Docket No. 79), at p. 5. Applying the limitations period to the newly-added plaintiffs, the Court finds that the contract and UCC claims (Counts II and III) and most of the MMFMA claims (Count I) of Dan Dierzbicki, Ajay Kansal, Easton Tire Company, WAM Development, Inc., and Easton Tire Company of Florissant, Inc. d/b/a Wildwood Shell are barred because effective December 3, 2002, defendants ceased selling motor fuel to plaintiffs and all contracts at issue were assigned. In response, plaintiffs contend that the newly-added plaintiffs' claims related back to the date of the filing of the original petition for statute of limitations purposes because the new plaintiffs are similarly situated with the original plaintiffs and raise identical claims against the defendants.
The new plaintiffs added to the Third Amended Complaint are Dan Dierzbicki, Ajay Kansal, Easton Tire Company, WAM Development, Inc., Easton Tire Company of Florissant, Inc. d/b/a Wildwood Shell, Reginald Williams, and REW Gas Oil, Inc. Pursuant to plaintiffs' voluntary dismissal, the Court dismissed plaintiffs Reginald Williams and REW Gas Oil, Inc. in the Order of October 28, 2004 (Docket No. 221).
Federal Rule of Civil Procedure 15(c) provides in relevant part:
(c) Relation Back of Amendments. An amendment of a pleading relates back to the date of the original pleading when
(3) the amendment changes the party or the naming of the party against whom a claim is asserted if the foregoing provision (2) is satisfied and, within the period provided by Rule 4(m) for service of the summons and complaint, the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
Fed.R.Civ.P. 15(c)(3). Although Rule 15(c) does not expressly address amendments changing plaintiffs, it does contemplate treating such amendments similar to those changing defendants. Fed.R.Civ.P. 15(c) Advisory Committee note to 1966 amendments,reprinted in 28 U.S.C. Rule 15 at 157. Thus, for an amended complaint which adds new plaintiffs to relate back, it must satisfy the three requirements of Rule 15 (c): the amended complaint must arise out of the conduct, transaction, or occurrence set forth in the original complaint; the new plaintiffs' interest must be sufficiently related to the original plaintiffs' interest that the defendants receive fair notice of the new plaintiffs' claims; and the defendant must not be unduly prejudiced by the addition of the new plaintiffs. Defendants' contention that the newly-added plaintiffs cannot satisfy all of the elements of Rule 15(c)(3) is with merit.
Irrespective of whether the newly-added plaintiffs satisfy the first two requirements, they cannot satisfy the third. Rule 15(c) bars a new plaintiffs' claims to relate back to the original filing date unless there was a "mistake concerning the identity of the proper party." Fed.R.Civ.P. 15(c). A mistake concerning the identity of the newly-named party is a requirement for an amended complaint to relate back to an original complaint. See, e.g., Nelson v. Adams USA, Inc., 529 U.S. 460, 467 n. 1 (2000) (mistake of identity essential element of Rule 15(c)(3) standard). Plaintiffs fail to claim a mistake concerning the new plaintiffs' identities and so the claims do not relate back to the original filing date. Likewise, the Restated and Amended Complaint does not allege any facts showing that the original plaintiffs and the newly-added plaintiffs were linked through any preexisting relationship and thus the absence of a sufficient identity or interest between the plaintiffs resulted in lack of fair notice to defendants. The Supreme Court has emphasized that notice of the new claims within the limitations period is the linchpin of a Rule 15(c) analysis. Schiavone v. Fortune, 477 U.S. 21, 31 (1986). Accordingly, the newly-added plaintiffs' claims do not relate back to the filing of the original complaint and thus the claims are either limited or barred by the applicable limitations period.
In the alternative, plaintiffs assert that fraudulent concealment tolls the statute of limitations period. Defendants contend that plaintiffs cannot assert fraudulent concealment based on law of the case. Inasmuch as the Court in the January 14, 2003, Order, disallowed the original plaintiffs from asserting that the statute of limitations were tolled due to fraudulent concealment, the Court finds that the newly added-plaintiffs are barred from asserting fraudulent concealment tolls the statute of limitations. Likewise, neither the MMFMA nor the UCC provides a basis for equitable tolling the limitations period, and thus plaintiffs cannot assert fraudulent concealment as a basis for tolling the limitations period. Clodfelter v. Thuston, 637 F. Supp. 1034, 1038 (E.D. Mo. 1986) (holding "where, . . ., a statute of limitations is a special one and not included in the general chapter on limitations, `the running thereof cannot be tolled because of fraud, concealment, or any other reason not provided in the statute itself'") (quotingState ex rel. Bier v. Bigger, 178 S.W.2d 347, 359 (Mo. 1944));Frazee v. Partney, 314 S.W.2d 915, 919 (Mo. 1958) (ruling "[a] special statute of limitations must carry its own exceptions, and we may not engraft others upon it"). Assuming arguendo that plaintiffs are correct in their contention that fraudulent concealment tolls the applicable statute of limitations, plaintiffs have nonetheless failed to establish fraudulent concealment evidence sufficient to toll the limitations period on either their UCC or MMFMA claims.
Applying the foregoing to the newly-named plaintiffs, the Court finds that plaintiffs cannot assert any UCC claims based on incidents or events occurring prior to January 29, 2003, and therefore all UCC claims asserted in Counts II and III by the new plaintiffs are dismissed as time-barred. Similarly, plaintiffs' MMFMA claims are limited to events or incidents occurring on or after January 29, 2000, based on the four-year statute of limitations. Accordingly, all of the claims asserted by WAM Development, Inc. and Dan Dierzbicki are time-barred because these plaintiffs ceased operating their stations prior to January 29, 2000 and therefore the MMFMA claims asserted by plaintiffs WAM Development, Inc. and Dan Dierzbicki are dismissed.
On January 29, 2004, the newly-added plaintiffs filed a Motion for Leave to File Amended and Restated Complaint (Docket No. 117). Thus, the statute of limitations time periods are determined based on that date.
Next, defendants request that plaintiffs' allegations regarding the relevant geographic market be made more definite and the phrase "elsewhere" be stricken from the Amended and Restated Complaint. Defendants contend that the Court has previously determined the relevant geographic market to be the St. Louis marketplace. The Court will reject plaintiffs' attempt to expand the scope of the relevant geographic market because the allegations in the Amended and Restated Complaint encompass areas to which customers cannot and do not turn for alternative sources of Shell-branded motor fuel. The MMFMA bestows standing on private parties to enforce the discriminatory and below-cost pricing prohibitions for parties who have been injured "in a relevant geographic market." Mo. Rev. Stat. § 416.635. "The geographic market encompasses the geographic area to which consumers can practically turn for alternative sources of the products and in which the antitrust defendants face competition." Morgenstern v. Wilson, 29 F.3d 1291, 1296 (8th Cir. 1994). This Court has previously noted that plaintiffs "will be required to demonstrate that they were in competition with the allegedly favored buyers to ultimately recover on their claims." Indeed, plaintiffs in their Amended and Restated Complaint identify a number of instances of alleged discriminatory practices between St. Louis dealers and, in most instances, the alleged competitor is described as being no more than five miles away. Based on practical commercial realities and plaintiffs' own factual allegations, the Court defines the relevant geographic market for purpose of this case to encompass any retail sites supplied with Equilon motor fuel that are located within fifty miles of any of the plaintiffs' stations unless a factual inquiry during discovery shows different commercial realities facing consumers. Plaintiffs' reliance on cases involving truck stops as support for their market definition of St. Louis and elsewhere is misplaced inasmuch as the cases involve alleged price discrimination or below cost pricing among competing truck stops located along major interstate highways. By comparison, this case involves allegations of price discrimination between plaintiffs and their competitors, both of which are located within the St. Louis area. Accordingly, the Court defines the relevant geographic market to encompass any retail sites supplied with Equilon motor fuel that are located within fifty miles of any of the plaintiffs' stations and directs plaintiffs to strike "elsewhere" from the Amended and Restated Complaint when used in reference to the relevant geographic market.
Defendants also move to strike plaintiffs' allegations regarding purchasers other than at the retail level of distribution from plaintiffs' MMFMA and UCC claims. Defendants contend that the allegations relating to jobber pricing, the prices charged for unbranded motor fuel, and the prices charged to joint ventures are irrelevant to plaintiffs' UCC and breach of contract pricing claims inasmuch as such purchasers did not purchase Shell-branded motor fuel under a pricing provision similar to plaintiffs' contracts. Defendants request that plaintiffs' allegations regarding purchasers other than at the retail level of distribution be stricken from the UCC and MMFMA claims. In the Amended and Restated Complaint, plaintiffs plead their pricing provision as "the dealer prices for the respective grades and brands delivered in effect at the time loading commences at the Plant and for the place of delivery." (Amended and Restated Complaint at ¶ 35). Under the MMFMA, the only relevant purchasers are those who are "on the same level of distribution." Mo. Rev. Stat. § 416.615. Accordingly, the Court will grant defendants' motion as directed to plaintiffs' MMFMA claims in Count I and direct plaintiffs' to strike purchasers other than at the retail level of distribution from plaintiffs' MMFMA claims asserted in Count I of the Amended and Restated Complaint.
In Count II, plaintiffs allege that defendants breached the agreements by selling motor fuel "to other Shell franchise dealer stations and to the other wholesale purchasers described herein for less than Defendants sold motor fuel to Plaintiffs." (Restated and Amended Complaint at ¶ 60). In Count III, plaintiffs allege that defendants violated UCC § 2-305 "in that Defendants' motor fuel prices charged to Plaintiffs were unreasonably high, were not made in good faith and were intended to discriminate against Plaintiffs." (Amended and Restated Complaint at ¶ 64). Defendants argue that plaintiffs cannot allege that jobbers, joint ventures, and purchasers of unbranded motor fuel purchased Shell-branded motor fuel under a pricing provision identical to plaintiffs' contracts and thus such allegations should be stricken from the Amended and Restated Complaint. In support, defendants cite the holding in HRN, Inc. v. Shell Oil Company, contending that plaintiffs' allegations regarding prices paid by purchasers in other classes of trade or who have different contractual buying agreements, for example, purchasers other than Shell-branded dealers, should be stricken from the UCC claims. 144 S.W.3d 429 (Tex. 2004). Based on a review of the HRN decision, the Court finds defendants' argument has merit. As a result, the Court finds that defendants' Motion to Strike plaintiffs' allegations regarding purchasers other than at the retail level of distribution should be granted and thus such allegations will be stricken from the MMFMA and UCC claims.
Plaintiffs assert in their fraud and misrepresentation claims (Counts IV, V, and VII) of the Amended and Restated Complaint that defendants failed to disclose an alleged business plan by which they would cease supplying dealer stations during their business relationships with plaintiffs. Plaintiffs contend that defendants' employees counseled plaintiffs regarding the pricing of motor fuels and other business decisions but concealed the zone pricing system used to implement the alleged business plan. Plaintiffs also allege that defendants intentionally misrepresented that they would maintain a viable dealer channel of trade in St. Louis and they would charge plaintiffs the same price for motor fuel that defendants charged other wholesale purchasers in the same market. Plaintiffs further allege that defendants implemented the zone pricing system in order to influence each dealer's prices and sales thereby interfering with plaintiffs' contractual and business relationships with their retail customers and causing plaintiffs' retail customers to purchase motor fuel from competing stations.
In the Amended and Restated Complaint, plaintiffs added tort claims for fraudulent suppression (Count IV), fraudulent misrepresentation (Count V), and tortious interference (Count VII). Defendants argue that the newly-added claims are barred by the economic loss doctrine. The economic loss doctrine prohibits a plaintiff from seeking to recover in tort for economic losses that are contractual in nature. "The doctrine was judicially created to protect the integrity of the UCC bargaining process; it prevents tort law from altering the allocation of costs and risks negotiated by the parties." Marvin Lumber and Cedar Co. v. PPG Indus., Inc., 223 F.3d 873, 882 (8th Cir. 2000). To date, the Missouri state courts have not applied the economic loss doctrine beyond the area of product liability context.
This is a diversity action and is governed by state substantive law. Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). When a state's highest court has not decided an issue, it is the task of this court to predict how the state supreme court would resolve the issue. Jackson v. Anchor Packing Co., 994 F.2d 1295, 1301 (8th Cir. 1993). In the absence of any controlling Missouri Supreme Court authority, a court may consider "relevant state precedent, analogous decisions, considered dicta, . . . and any other reliable date." St. Paul Fire Marine Co. v. Schrum, 149 F.3d 878, 880 (8th Cir. 1998) (quoting Lindsay Mfg. Co. v. Hartford Accident Indem. Co., 118 F.3d 1263, 1267 (8th Cir. 1997)). Decisions of the "various intermediate appellate courts are not [binding on this court], . . . [but] they are persuasive authority, and [we] must follow them when they are the best evidence of what [state] law is." Marvin Lumber, 223 F.3d at 883 (quoting Garnac Grain Co. v. Blackley, 932 F.2d 1563, 1570 (8th Cir. 1991)). Intermediate state court decisions should not be disregarded "unless [we are] convinced by other persuasive data that the highest state court would decide [the issue] otherwise." Commissioner v. Estate of Bosch, 387 U.S. 456, 465 (1967); United Fire Cas. Ins. Co. v. Garvey, 328 F.3d 411, 413 (8th Cir. 2003).
The Missouri Supreme Court first announced the economic loss doctrine in Crowder v. Vandendale, by finding that a subsequent purchaser of a house could not sue the builder to recover for the deterioration of the house caused by latent structural defects. 564 S.W.2d 879, 884 (Mo. 1978) (en banc). The court found that the owners had only a contractual claim under the theory of implied warranty of habitability, rather than a claim in tort, because the builder had no duty other than its contractual obligations to protect the owners from deterioration or loss of bargain damages. Id. ("liability imposed for mere deterioration or loss of bargain resulting from latent structural defects is contractual"). The court further indicated that liability in tort is only appropriate in cases in which recovery is sought for "personal injury, including death or property damage either to property other than the property sold or to the property sold where it was rendered useless by some violent occurrence." Id. at 881.
In a conflicting opinion, the Missouri Court of Appeals held that a remote purchaser of fireproofing materials could sue the manufacturer in negligence, even though only economic loss was alleged. Groppel Co., Inc. v. United States Gypsum Co., 616 S.W.2d 49 (Mo.Ct.App. 1981). In distinguishing Crowder, the court opined that the instant facts involved the sale of goods under the UCC with the product defective at the time of delivery whereas the house in Crowder deteriorated over time. Id. The court held that a tort duty of care arose out of the implied warranty provisions of the UCC. Id. Shortly after the Groppel decision, the Missouri Court of Appeals relying on Crowder, held that a remote purchaser of a silo which was damaged in a tornado could not sue the manufacturer for negligence for economic losses. Clevenger Wright Co. v. A.O. Smith Harvester Prods., Inc., 625 S.W.2d 906, 909 (Mo.Ct.App. 1981). The court opined that where the only damage is to the product sold, the purchaser was precluded from any recovery for mere economic loss based on negligence and that recovery was limited to contractual remedies afforded by contract law. Id.
In R.W. Murray Co. v. Shatterproof Glass Corp., the Eighth Circuit Court of Appeals found that Crowder and Clevenger Wright represented the law of Missouri regarding the economic loss doctrine. 697 F.2d 818, 828-29 (8th Cir. 1983). The plaintiff in that case, a supplier of glass panels used in construction of an office building, sued the manufacturer for economic losses due to defects in the panels. Id. at 821. Although the plaintiff was not the original purchaser of the panels, the court found the plaintiff to be the third party beneficiary of any warranties and limited the plaintiff's remedies to ones provided by the UCC. Id. 822-23. In relevant part, the court opined that the principle announced in Crowder that "recovery in tort is limited to cases in which there has been `personal injury, or property damage . . .,' precludes the appellants from pursuing a negligence cause of action seeking recovery for only economic loss." Id. at 828-29. Accordingly, based on the finding no personal injuries or damage to the product sold, the court dismissed the negligence claims and limited claimant's remedies to the UCC. Id. at 829.
In Sharp Bros. Contracting Co. v. American Hoist Derrick Co., the Missouri Supreme Court held that a plaintiff cannot recover on a strict liability theory in tort where the only damage is the product sold, no personal damage, and directed that the dictum to the contrary in Crowder should not be followed. 703 S.W. 2d 901, 903 (Mo. 1986) (en banc). Defendant sold a crane and the counterweight of the crane broke, crushing the crane's cab, but causing no personal injury or other damage. Upon remand to determine whether the negligence and warranty claims were properly dismissed, the Missouri Court of Appeals found that the economic loss doctrine barred recovery for the negligent design and construction of the crane but that the doctrine did not necessarily bar recovery for the defendant's negligent recommendations and directions regarding modifications to the crane intended to correct the defect prior to the accident. Sharp Bros. Contracting Co. v. American Hoist Derrick Co., 714 S.W.2d 919, 922 (Mo.Ct.App. 1986); but see Grus v. Patton, 790 S.W.2d 936, 942-43 (Mo.Ct.App. 1990) (limiting and construing Sharp as applicable when there are additional acts of misfeasance undertaken outside of the contract which caused damage to defendant). In finding the economic loss doctrine not applicable, the Missouri Court of Appeals found that plaintiffs, owners of building, alleged that not only was the asbestos defective, it contaminated the entire building. Clayton Ctr. Assocs. v. W.R. Grace Co., 861 S.W.2d 686, 692 (Mo.Ct.App. 1993). The court concluded that plaintiffs were entitled to keep a jury verdict for negligence against the asbestos manufacturer. Id. In a recent Missouri Court of Appeals per curiam opinion, the court found that the insurance company could not recover on negligence claims for property damage sustained when vehicle was destroyed in fire allegedly caused by a defect in the truck's fuel line. Landmark American Ins. Co. v. Paccar, Inc., 140 S.W.3d 296 (Mo.Ct.App. 2004).
Citing the policy considerations set forth in Shatterproof Glass, the court restricted plaintiff's recovery to a suit on contract in a sale of services case and rejected plaintiff's request to allow recovery for economic loss occasioned by negligent performance of services in the absence of personal injury or damage to property other than property at issue. Titan Tube Fabricators v. Unidynamics Corp., 651 F. Supp. 543, 544 (E.D. Mo. 1986). Plaintiff sought damages for lost profits suffered as a result of defendant's failure adequately to perform on a contract. Id. In Laidlaw Waste Sys., Inc. v. Mallinckrodt, Inc., 925 F. Supp. 624 (1996), defendants moved to dismiss plaintiffs' tort claims contending that plaintiffs were improperly seeking to recover for economic losses arising out of a contractual relationship. Plaintiffs, owners of a landfill site and transporters of waste, brought action against defendants, shippers of waste to the landfill, which waste was later discovered to be hazardous, seeking recovery under various tort theories for monetary damages as a result of permanent damage to their real property. Citing Crowder as support, the court opined that the economic loss doctrine was inapplicable to plaintiffs' tort claims because plaintiffs alleged damage to other property, specifically, the landfill site. Id. at 635;Crowder, 564 S.W.2d at 882 (personal injury or damage to property interests compensable in tort, while a mere deterioration or loss of bargain is not). In particular, the court noted that plaintiffs alleged that they contracted with defendants to deposit non-hazardous waste on the property for monetary compensation, but defendants deposited hazardous waste causing permanent damage to plaintiffs' real property. In finding defendants' motion to dismiss should be denied, the court concluded that "[p]laintiffs clearly assert claims for damage above and beyond any mere disappointed commercial expectations or desire to enjoy the benefit of their alleged agreement with defendants." Laidlaw, 925 F. Supp. at 635.
In Rockport Pharmacy, Inc. v. Digital Simplistics, Inc., the Eighth Circuit Court of Appeals determined based on the damages alleged in Rockport's complaint, the original cost of the computer system, and maintenance and replacement expenses, such losses were not recoverable on a negligence theory. 53 F.3d 195 (8th Cir. 1995) (citing Shatterproof, 697 F.2d at 829 andClevenger, 625 S.W.2d at 909). "Missouri prohibits a cause of action in tort where the losses are purely economic." Id. at 198. The court explained that "recovery in tort is limited to cases in which there has been `personal injury, or property damage either to property other than the property sold, or to the property sold when it [i]s rendered useless by some violent occurrence[.]'" Shatterproof Glass, 697 F.2d at 828-29. In rejecting Rockport's argument that the economic loss doctrine does not apply in an action based on the negligent rendition of services by a professional, the court noted that the contract between the parties was not primarily for services, but rather for the sale of goods, and that the complaint was devoid of any allegations of violation of any professional standard of care. Id. at 199.
Applying Minnesota law, the Eighth Circuit Court of Appeals addressed the issue of whether the economic loss doctrine applied to intentional fraud claims and opined that "the Minnesota Supreme Court would resolve the legal issue in this case by holding that, in a suit between merchants, a fraud claim to recover economic losses must be independent of the Article 2 contract or it is precluded by the economic loss doctrine." AKA Distributing Co. v. Whirpool Corp., 137 F.3d 1083, 1087 (8th Cir. 1998). Citing Shatterproof in support, the court explained that "the presence of a governing commercial contract neither preempts nor eliminates the need for all fraud claims to which the parties dealing may rise. Id. at 1086. The court further opined that actionable claims "must be based on a representation that was outside of or collateral to the contract, such as many claims of fraudulent inducement." Id. Applying the foregoing, the court concluded that the fraud claims arising from an alleged promise that AKA would be a distributor for a long time were not independent of the contract between the parties and, therefore, the economic loss doctrine would limit AKA to remedies for breach of the contract's duration terms. Id. at 1087. In comparison, the court found the constructive fraud and negligent representation claims based upon Whirpool's alleged failure to disclose business plans harmful to AKA to be collateral to the contract and thus support an independent fraud claim. Id.
In a diversity case, it may be both imprudent and improper for a federal court to expand substantive liability under state law.Trimble v. Asarco, Inc., 232 F.3d 946, 963 (8th Cir. 2000) (citing Tucker v. Paxson Mach. Co., 645 F.2d 620 (8th Cir. 1981)) (in diversity case under Missouri law, rejecting plaintiff's argument for adoption in federal court of expanded strict products liability doctrine, on ground that the trend was not well established in state law); accord Birchler v. Gehl Co., 88 F.3d 518, 521 (7th Cir. 1996) ("When we are faced with opposing plausible interpretations of state law, we generally choose the narrower interpretation which restricts liability, rather than the more expansive interpretation which creates substantially more liability."); Villegas v. Princeton Farms, Inc., 893 F.2d 919, 925 (7th Cir. 1990) ("federal court is not the place to press innovative theories of state law")).
Based on the foregoing, the Court believes the Missouri Supreme Court would resolve the legal issue by holding that, in a suit involving a commercial transaction between merchants, a fraud claim to recover economic losses must be independent of the contract or such claim would be precluded by the economic loss doctrine. In the instant case, plaintiffs' claims for damages are not above and beyond any mere disappointed commercial expectations or desire to enjoy the benefit of the dealer agreements. The Court determines that the general rule limiting plaintiffs to contract damages for economic loss governs inasmuch as the contracts at issue were for the sale of goods, not services. The substance of plaintiffs' torts claims is for recovery of losses arising out of the parties contractual relationships. In particular, plaintiffs claim defendants failed to inform them of the alleged business plan and scheme under which they would eliminate or cease supplying dealer stations (Count IV — fraudulent suppression), breached the pricing terms of the lease and the supply agreements (Count V — misrepresentation and fraud), and interfered with plaintiffs' contractual and business relationships with their retail customers (Count VII — intentional/tortious interference with contractual and business relations). Plaintiffs are seeking to recover in tort for losses that are contractual in nature and the only damages asserted are purely economic losses, lost profits and business and future business expectations, resulting from defendants' pricing strategy and zone pricing. Accordingly, plaintiffs' claims for contractual relief affords plaintiffs' relief, and coterminous tort actions do not lie with the exception of plaintiffs' fraudulent suppression claim in Count IV inasmuch as this claim is based upon defendants' alleged failure to disclose business plans and strategies harmful to plaintiffs and thus collateral to and independent of the agreements between the parties.
Although the fraudulent suppression claim is not barred by the economic loss doctrine, the Court determines it must fail for other reasons raised by defendants. Plaintiffs assert that defendants failed to disclose their alleged business plan and scheme to "eliminate or cease supplying dealer stations" and the use of the zone pricing system to implement such plan and as a result plaintiffs renewed their dealer agreements with defendants. To state an actionable claim of fraudulent suppression, plaintiffs must allege the same nine elements required to establish fraud by affirmative misrepresentation.Kansas City Downtown Minority Dev. Corp. v. Corrigan Assocs. Ltd. Partnership, 868 S.W.2d 210, 219 (Mo.Ct.App. 1994). Before a failure to speak constitutes a misrepresentation, "the silent party must have a duty to speak." Id. Based on the allegations set forth in plaintiffs' fraudulent suppression claim, the claim fails as a matter of law inasmuch as no duty to speak is created by the franchiser/franchise relationship. Plaintiffs cite no justification for departure from the general rule that no duty to disclose exists in an arms-length commercial transaction. Chmieleski v. City Prods. Corp., 660 S.W.2d 275, 294 (Mo.Ct.App. 1983); Cambridge Eng'g, Inc. v. Robertshaw Controls Co., 966 F. Supp. 1509, 1521 (E.D. Mo. 1997) (duty to disclose does not generally arise in a commercial transaction unless there is a fiduciary relationship between the parties). "Missouri law is quite clear that no fiduciary relationship exists between a franchiser and a franchisee." Jimmy Dan, Inc. v. Chrysler Credit Corp., 643 F. Supp. 368, 368-69 (W.D. Mo. 1986); Chmieleski, 660 S.W.2d at 294 (well settled in Missouri that the existence of business relationship does not give rise to fiduciary relationship); Bain v. Champlin Petroleum Co., 692 F.2d 43, 47-48 (8th Cir. 1982) (grant of franchise of itself insufficient to impose on the franchiser all of the duties and responsibilities which traditionally pertain to a true fiduciary absent fraud, secret profits, or public policy protecting franchisee). Accordingly, plaintiffs' fraudulent suppression claim fails as a matter of law.
In Count VI, plaintiffs allege that defendants have engaged in discriminatory pricing by charging plaintiffs more for motor fuel, and by providing allowances, rebates and other services to plaintiffs' competitors in violation of the Robinson-Patman Act, 15 U.S.C. § 13. As previously determined by the undersigned in the Order of February 7, 2002, the Court is unprepared to require plaintiffs to allege facts which are most likely only available through discovery. In support, defendants cite to Chawla v. Shell Oil Co., 75 F. Supp.2d 626 (S.D. Tex. 1999), where the court required the plaintiffs to amend their complaint to contain specific allegations regarding the names and locations of the allegedly favored buyers, the geographic area in which plaintiffs competed with those buyers, and the approximate prices the allegedly favored buyers received. Id. at 654. In order to ultimately prevail on their claims, plaintiffs will be required to demonstrate that they were in competition with the allegedly favored buyers. "An antitrust plaintiff need not allege specific transactions in the Complaint . . ., a `general description of the conduct and practices at issue' will suffice." National Assoc. of College Bookstores, Inc. v. Cambridge Univ. Press, 990 F. Supp. 245, 252 (S.D.N.Y. 1997). The undersigned finds that the determination whether plaintiffs have sufficient proof of discrimination in pricing to allegedly favored competitors is more properly addressed in a motion for summary judgment. Nonetheless, a review of the Amended and Restated Complaint shows that plaintiffs have not identified any alleged favored competitor. Accordingly, the Court will deny without prejudice defendants' Motion to Dismiss and to Strike as directed to Count VI of the Amended and Restated Complaint and direct plaintiffs to identify the alleged favored competitors no later than June 8, 2005. In particular, plaintiffs must identify the identity and location of each favored buyer, who is in competition with plaintiffs, the approximate price that the favored buyer received and the approximate time period of the allegedly unlawful treatment. Chawla, 75 F.Supp.2d at 654.
B. Discovery Motions
In the Motion to Compel Defendants' Initial Disclosures, plaintiffs seek to compel defendants' compliance with the initial disclosure requirements of Rule 26(a). The Court has reviewed plaintiffs' Motion to Compel, defendants' opposition thereto, and plaintiffs' reply, and concludes that based on the record and the argument presented on December 15, 2004, defendants will not be required to supplement their initial disclosures.
Rule 26(a) imposes on parties a duty to disclose certain basic information "that the disclosing party may use to support its position." Advisory Committee Notes to 1993 and 2000 Amendments. As explained by the Advisory Committee Notes to the 1993 Amendments to Rule 26, the goal of the initial disclosure requirements is to "accelerate the exchange of basic information about the case and to eliminate paper work involved in requesting such information." Rule 26 Advisory Committee Notes; Fitz, Inc. v. Ralph Wilson Plastics Co., 174 F.R.D.587, 589 (D.N.J. 1997). The initial disclosure requirement should be applied "with common sense . . . keeping in mind the salutory purposes that the rule is intended to accomplish." Id. The undersigned notes that neither the Eighth Circuit, nor any other Circuit Court, has rendered a decision to how Rule 26(a) should be interpreted. Indeed, the few lower courts which have considered the issue have quoted the same Advisory Committee Notes previously mentioned regarding the general purposes of the discovery rules, but have not opined on the specific requirements of Rule 26(a). See, e.g., Fitz, 174 F.R.D. at 589 (discussing the requirements of Rule 26(a)(1) in the context of a case involving a party's complete failure to disclose). The Court finds that the level of defendants' initial disclosures comports with the basic exchange of information intended by Rule 26(a)(1), with the caveat that defendants supplement the information produced by providing the document retention policy. Thus, no further Court action on the merits of the motion is required at this time.
In the Motion to Show Cause and to Place Documents under Seal, defendants request the Court to issue an order directing plaintiffs and their counsel to show cause why the Court should not compel them to disclose under oath the source of certain confidential materials, in particular portions of three deposition transcripts, and to place the deposition transcripts under seal. In the Response to Defendants' Motion to Show Cause, Plaintiffs' Cross-Motion to Compel, and Incorporated Memorandum of Law, plaintiffs explain how they obtained the deposition excerpts from the unsealed Indiana court record in Donald Adams, et al. v. Shell Oil Company, Cause No. IP97-1422-CM/S ("Becher" case). Inasmuch as the deposition transcripts are part of the Indiana court record and counsel explained in a court pleading subject to Rule 11 sanctions the source of the deposition transcripts, the Court will deny defendants' Motion to Show Cause and to Place Documents under Seal. See Local Rule 11-2.11.
In the Cross-Motion to Compel, plaintiffs request the full transcripts for the depositions of Evelyn Robinson, Michael T. Hanley, Diane McFarlene, Joseph Michael Greer, Richard A. Broderick, and Ann Spiegal; all documents relating to Equilon being sanctioned in the Becher case; and an accounting of whether Equilon destroyed any Becher documents. The Court will direct defendants to produce deposition excerpts containing testimony regarding the creation and purpose of Equilon's Strategic Marketing Initiative, its Regional Planning System documents as related to the St. Louis market, and its document retention policies. The Court will deny without prejudice plaintiffs' request for documents relating to Equilon being sanctioned in theBecher case and for an accounting of whether Equilon destroyed any Becher documents subject to being raised after the completion of discovery in this case.
The undersigned notes that defendants refer to Ms. McFarlene as Ms. McFarland in their Motion to Show Cause and to Place Documents under Seal and will assume unless otherwise corrected that Ms. McFarlene and Ms. McFarland are one and the same.
IT IS HEREBY ORDERED that defendants' Motion to Dismiss and to Strike Directed at Plaintiffs' Amended and Restated Complaint (Docket No. 180/filed July 9, 2004) is granted in part and denied in part.
IT IS FURTHER ORDERED that Counts IV, V, and VII are dismissed for the reasons set forth in the Memorandum and Order.
IT IS FURTHER ORDERED that the phrase "elsewhere" as used in relation to the relevant geographic market shall be stricken from the Amended and Restated Complaint.
IT IS FURTHER ORDERED that plaintiffs' allegations regarding purchasers other than at the retail level of distribution shall be stricken from the Amended and Restated Complaint.
IT IS FURTHER ORDERED that plaintiffs shall identify the alleged favored competitors no later than June 8, 2005 as set forth in the Memorandum and Order.
IT IS FURTHER ORDERED that plaintiffs' Motion to Compel Defendants' Initial Disclosures (Docket No. 158/filed May 14, 2004) is denied.
IT IS FURTHER ORDERED that defendants' Motion to Show Cause (Docket No. 195/filed August 20, 2004) is denied.
IT IS FURTHER ORDERED that plaintiffs' Cross-Motion to Compel (Docket No. 204/filed September 2, 2004) is denied in part and granted in part.
IT IS FURTHER ORDERED that plaintiffs' Emergency Motion for This Court to Have a Hearing to Amend the Case Management Order to Extend Discovery Deadlines (Docket No. 232/filed December 1, 2004) is granted in part.
IT IS FURTHER ORDERED that the parties shall file a proposed Amended Case Management Order extending the discovery deadlines and setting a new trial date no later than April 14, 2005.
IT IS FURTHER ORDERED that defendants' Motion to File Reply Memorandum in Support of Their Motion to Dismiss and to Strike Directed at Plaintiffs'
Amended Complaint and the Attached Exhibits Under Seal (Docket No. 196/filed August 20, 2004) is granted.