Bayhylle v. Jiffy Lube International, Inc.

2006 OK CIV APP 130, 146 P.3d 856, 2006 Okla. Civ. App. LEXIS 103
CourtCourt of Civil Appeals of Oklahoma
DecidedSeptember 12, 2006
Docket101,613, 101,628
StatusPublished
Cited by2 cases

This text of 2006 OK CIV APP 130 (Bayhylle v. Jiffy Lube International, Inc.) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bayhylle v. Jiffy Lube International, Inc., 2006 OK CIV APP 130, 146 P.3d 856, 2006 Okla. Civ. App. LEXIS 103 (Okla. Ct. App. 2006).

Opinion

Opinion by

DOUG GABBARD II, Presiding Judge.

{1 This is an appeal of the trial court's order approving the settlement of a class action lawsuit. Based on the record and applicable law, we affirm.

FACTS

12 The original Plaintiffs, Stephani Bay-hylle and Joseph Brent Smith, were eustom-ers of Defendant, Jiffy Lube International (Jiffy Lube), a company specializing in quick oil changes for around $30. Since 1999, this price included an "environmental surcharge" of between $.80 and $1.25. Plaintiffs claim the fee was not based on any governmental charge, but was simply made to enhance Jiffy Lube's profits. The amount generated by the fee, multiplied by millions of oil changes, amounted to more than $30,000,000.

13 Plaintiffs sued Jiffy Lube for breach of contract, unjust enrichment, and conspiracy, and sought to certify the lawsuit as a class action, pursuant to 12 0.S8.2001 § 2028. They proposed two nationwide classes, each consisting of customers who had received a "Jiffy Lube Signature Service" oil change since October 1999 and had been charged the fee. These classes were designated the "company class," consisting of about seven million customers, who, like Plaintiff Smith, were customers of the 418 Jiffy Lube-owned stores (excluding New York stores), and the "franchise class," consisting of about 26 million customers who, like Plaintiff Bayhylle, were customers of Jiffy Lube's 1,789 franchises.

14 Two years after the litigation began, Plaintiffs and Jiffy Lube reached a settlement agreement. It provided that Jiffy Lube would stop charging the environmental fee in its company-owned stores and would give those customers a coupon good for $5 off an oil change. The settlement did not include coupons for the franchise store customers. Instead, Jiffy Lube promised to notify its franchisees that it was no longer charging the fee at its company stores and that all fees charged must be fair, reasonable, and properly disclosed. Plaintiffs asserted that the settlement achieved their main goal of eliminating the environmental fee in the company stores. They also argued that Jiffy Lube lacked authority to prohibit franchises from charging the fee. Under the settlement, Jiffy Lube also agreed to pay Plaintiffs' counsel $2,750,000 in attorney's fees.

15 The trial court issued a preliminary order approving the settlement. Notice and the coupon were provided to company customers by mail, and notice was provided to franchise customers through notices in two national publications, Parade Magazine and USA Weekend, plus through a website and a toll-free number. Several customers and class members (Objectors), who are Appellants here, objected to the settlement as failing to offer franchise customers any relief at all and only offering company customers a coupon less than what Jiffy Lube routinely offered the public at large. 1

16 Plaintiffs responded by asserting that Objectors "simply waited in the wings" while Plaintiffs vigorously litigated the action and achieved results, and that Objectors' motive was to obtain a portion of the attorney fee award provided in the settlement. Objectors replied that, because they had resisted a narrow settlement, Jiffy Lube looked for and found a "sweetheart settlement" in the Oklahoma litigation.

*859 T7 In two orders, totaling 48 pages, the trial court approved the settlement and dismissed the lawsuit. The trial court began by noting that evidence showed the environmental fee was not charged for collection and disposal of used oil, but was used to offset costs of operating the company stores. The trial court then set out the rules for evaluating a proposed settlement of a class action. Essentially, these rules require that, before giving its approval, a court "must find that the settlement is fair, adequate and reasonable and is not a product of collusion between the parties." Thomas v. Albright, 139 F.3d 227, 231 (D.C.Cir.1998) (quoting Fed.R.Civ.P. 23(e)).

T8 In the case at bar, the trial court stated: "[TJhe Court concludes that the Settlement is fair, adequate, and reasonable in that it contemplates all Class Members in this case, given their claimed damages and their low probability of success on the merits." On this last point, the court noted several problems:

(1) questions existed regarding contract formation, the voluntary payment doctrine, and ageney issues;
(2) liability questions existed, given that the fee was disclosed to customers and evidence indicated Jiffy Lube's environmental costs were greater than the total surcharge collected; and
(8) questions existed about Jiffy Lube's liability to franchise customers since franchises were separate companies not under the day-to-day control of Jiffy Lube.

Regarding the last issue, the court noted Jiffy Lube had the right to regulate services, products, and advertisements of its franchisees, but not prices (including whether to charge the environmental fee) because the franchise agreements made franchisees independent contractors who separately owned and operated their businesses. The court stated all these factors accounted for the settlement not including coupons to franchise customers, and noted those customers retained the right to bring lawsuits against franchise stores. 2 Objectors appeal. 3

STANDARD OF REVIEW

19 Oklahoma's class action statute requires that a class action shall not be dismissed or compromised without the approval of the court. 12 0.S8.2001 § 20283(E). Because § 2023 bears great similarity to the provisions of Federal Rule of Civil Procedure 28, we may resort to federal authority to shed light on its rationale. Mattoon v. City of Norman, 1981 OK 92, ¶8, 633 P.2d 735, 737. The federal courts have held that a trial court's approval of a class action settlement is reviewed for abuse of discretion. In re Integra Realty Resources, Inc., 354 F.3d 1246, 1266 (10th Cir.2004). This is the general standard of review in class action certification cases. Shores v. First City Bank Corp., 1984 OK 67, ¶4, 689 P.2d 299, 301.

ANALYSIS

110 Objectors first assert that the settlement is not fair and reasonable because millions of franchise customers will not receive the coupon sent to company store customers or any other tangible benefit, even though they suffered similar harm.

¶11 In determining whether a settlement is reasonable, the trial court's primary task is to evaluate the terms of the settlement in relation to the strength of the plaintiffs case. Thomas v. Albright, 139 F.3d 227, 281 (D.C.Cir.1998).

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Cite This Page — Counsel Stack

Bluebook (online)
2006 OK CIV APP 130, 146 P.3d 856, 2006 Okla. Civ. App. LEXIS 103, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bayhylle-v-jiffy-lube-international-inc-oklacivapp-2006.