Mick v. Level Propane Gases, Inc.

168 F. Supp. 2d 804, 2001 U.S. Dist. LEXIS 22598, 2001 WL 345452
CourtDistrict Court, S.D. Ohio
DecidedApril 6, 2001
Docket2:98-cv-00959
StatusPublished
Cited by1 cases

This text of 168 F. Supp. 2d 804 (Mick v. Level Propane Gases, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mick v. Level Propane Gases, Inc., 168 F. Supp. 2d 804, 2001 U.S. Dist. LEXIS 22598, 2001 WL 345452 (S.D. Ohio 2001).

Opinion

OPINION AND ORDER

SARGUS, District Judge.

This matter came before the Court on March 14 and 15, 2001 for a Hearing on Plaintiffs’ February 14, 2001 Motion for Class-Wide Temporary and Preliminary Injunctive Relief. (Doc. # 47). The Plaintiffs’ motion is granted in part and denied in part, as set forth below.

I.

Plaintiffs herein are comprised of a class of residential consumers of propane gas supplied by Defendant Level Propane Gases, Inc. [“Level”]. The Plaintiff class consists of all Ohio residential consumers who, at any time on or after September 1, 1994, are, have been, or will be customers of Level. 1 Plaintiffs’ claims are brought pursuant to the Equal Credit Opportunity Act [“ECOA”], 15 U.S.C. § 1691, et seq.; the Fair Credit Reporting Act [“FCRA”], 15 U.S.C. § 1681, et seq.; and the Ohio Consumer Sales Practices Act [“CSPA”], O.R.C. § 1345.01, et seq. Plaintiffs’ Motion for Class-Wide Temporary and Preliminary Injunctive Relief centers on Level’s alleged failure to adhere to its “firm” or “guaranteed” pricing as stated in the relevant consumer contracts and in mass-marketing materials. The Plaintiffs seek injunctive relief pursuant to R.C. § 1345.09(D) and Fed.R.Civ.P. 65. The Court exercises jurisdiction over this action pursuant to 28 U.S.C. § 1331 and § 1367.

In this case, Plaintiffs allege that Level has violated the CSPA by failing to make *806 timely deliveries of propane gas to consumers; by failing to provide adequate customer service to consumers; and by engaging in deceptive and/or unconscionable pricing practices with respect to consumer propane gas contracts.

II.

Level, headquartered in Westlake, Ohio, is a large distributor of propane, a gas used by consumers for heat, as well as cooking. Propane is a fuel which is typically stored by consumers in on-site tanks, particularly useful to residents who do not live in the vicinity of natural gas lines. Level does business in fourteen states. Approximately 40,000 of Level’s 100,000 total customers are located in Ohio.

The consumer propane heating season spans the months of November to March each year. Prior to the heating season, and particularly in July and August, propane prices are generally at their lowest point in the market. Level historically entered into contracts with suppliers during the months of April through September for what is known as the “forward purchase” of propane. In the several years prior to 2000, seventy-five per cent of Level’s projected propane supply for the heating season was secured through forward contracts. According to its current CEO, Walter Himmelman, most of Level’s competitors did not purchase propane through forward contracts. Level entered into such contracts as a means to control propane costs and offer its consumers competitive prices. Level competes with a number of other propane suppliers. Companies in the propane market seek to offer prices lower than competitors and often offer promotional introductory offers with price incentives to obtain new customers.

In April and May 2000, the market price for propane was not as low as it had been in previous years. In addition, prices fluctuated more than Level had anticipated. Himmelman testified that, although Level had secured some forward contracts in May and June 2000, Level did not acquire the amount of its anticipated winter season propane supply that it historically had purchased during this period. Level expected the prices to drop further in June 2000. As Himmelman testified, Level made a business decision not to contract for additional propane supplies in June or July 2000.

By late August and early September 2000, however, Level was unable to secure forward contracts from suppliers. Thus, by September 2000, Level knew that it would have to purchase the majority of its supply for the upcoming heating season at market prices. In November 2000, the weather was very cold and Level’s delivery of propane to consumers had to be accelerated. In addition, Level’s customer base for residential propane heat had grown.

Further, as to Level’s forward purchases, two of Level’s suppliers had invoked force majeure clauses contained in the supply contracts which forced Level to buy even more propane on the open market. Through a confluence of these events, Level was required to purchase the majority of its propane supply on the open market beginning in the 1999-2000 heating season. During this period, the price of propane rose substantially.

Before the pricing events described above had occurred, in April 2000, approximately 12,000 customers who had been with Level for one year received one of two letters purporting to offer guaranteed prices on continued propane service. (Defendant’s Exhibit 3). The April 5, 2000 letter, which stated the customer’s name and current propane price at the upper corner, read as follows:

To thank you for your loyalty to Level Propane, we would like to extend a guarantee on your propane price until *807 the spring of 2001. This could equal great savings to you. However, this is just the beginning!
Would you like to continue receiving your current Level Propane price even after next spring? We are now offering you the opportunity to lock in your current propane price. For just one low payment of $59.95 for a 500 gallon tank, your Level Propane costs will remain at your current price per gallon for another full year. This means your propane costs are guaranteed until the spring of 2002.
We would also like to tell you about a Level program designed to save you, our valued customer even more money. Our Pre-Buy Program allows you to purchase your propane at a discounted rate of 10 cents per gallon. By pre-buying a minimum of twice your tank size, Level will pass this incredible savings opportunity on to you if you purchase by May 1, 2000. We will also extend a discount of 8 cents per gallon through September 1, 2000. We must receive your payment 7 days before your first Pre-Buy delivery.

(.Defendant’s Exhibit S). In a similar letter dated April 10, 2000, Level informed other customers that Level “would like to extend a guarantee on your propane price until the spring of 2001.” (Id.). This letter also contains at the top left corner, the customer’s account number and the “current price” of propane gas. A number of Level consumers received letters purporting to guarantee their then current rates for propane until Spring 2001. These letters were sent to induce customers to remain Level customers and to prevent customers from switching to other suppliers.

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Cite This Page — Counsel Stack

Bluebook (online)
168 F. Supp. 2d 804, 2001 U.S. Dist. LEXIS 22598, 2001 WL 345452, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mick-v-level-propane-gases-inc-ohsd-2001.