State Ex Rel. Nixon v. QuikTrip Corp.

133 S.W.3d 33, 2004 Mo. LEXIS 40, 2004 WL 615344
CourtSupreme Court of Missouri
DecidedMarch 30, 2004
DocketSC 85399
StatusPublished
Cited by24 cases

This text of 133 S.W.3d 33 (State Ex Rel. Nixon v. QuikTrip Corp.) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Nixon v. QuikTrip Corp., 133 S.W.3d 33, 2004 Mo. LEXIS 40, 2004 WL 615344 (Mo. 2004).

Opinions

MICHAEL A. WOLFF, Judge.

Introduction

Does Missouri’s Motor Fuel Marketing Act protect gas stations from competition, which may raise prices to consumers, or does the act only protect these businesses from injurious competition?

The state brought an action against QuikTrip for pricing its retail gasoline sales below its wholesale cost at its Herculaneum store on 23 days, alleging that QuikTrip violated the act. On stipulated facts, the circuit court granted summary judgment in favor of the state and assessed penalties of $3,000 per day.

On appeal, QuikTrip challenges the constitutionality of the statute and, alternatively, argues that the circuit court has misconstrued the statute by holding Quik-Trip liable for selling gas to the public at less than its wholesale cost. Because of the challenge to the validity of the statute, this Court has exclusive appellate jurisdiction. Mo. Const, art. V, sec. 3.

[35]*35The Motor Fuel Marketing Act,1 in section 416.615, makes it unlawful for QuikTrip to sell gas below its cost if the intent or effect of the sale or offer is (1) “to injure competition;” or (2) “to induce the purchase of other merchandise, to unfairly divert trade from a competitor, or otherwise to injure a competitor.” The state’s case rests on the theory that Quik-Trip’s gas pricing unfairly diverted trade from a competitor or otherwise “injured” a competitor. The state does not contend that there was an injury to competition.

What does it mean to “unfairly divert trade from a competitor, or otherwise to injure a competitor?” The circuit court’s decision seems to be premised on the theory that a competitor suffers “injury” from QuikTrip’s below-cost fuel pricing when the competitor lowers its prices and makes a smaller profit on its fuel sales. The statute, however, speaks simply of “a competitor,” and these gas stations compete not just in fuel sales but in sales of many other items, the customer traffic for which may be generated by fuel sales. The statute, moreover, does not define “injure.”

When QuikTrip prices its fuels below cost, and if a competitor must price its fuels below cost to meet this competition, the competitor has two choices: (1) the competitor can resist lowering its prices below its costs, in which case a court could find that the intent or effect of QuikTrip’s below-cost pricing unfairly diverts trade from the competitor; or (2) the competitor can lower its prices below its costs and thus be “injured” by having to sell its fuels below cost, which may threaten its survival in the marketplace unless sales of other items keep the business profitable.

The circuit court’s decision is premised on the theory that QuikTrip’s sales of motor fuels below cost apparently diminished the competitor’s profits. This is not sufficient to make a viable claim for unfairly diverting trade or causing “injury” to a competitor. The state’s claim is, thus, unsupported by evidence of unfair diversion of trade or of injury to a competitor. The circuit court’s judgment is reversed, and the case is remanded.

Facts and Decision of the Circuit Court

The Attorney General brought an enforcement action against QuikTrip in 1999 alleging that QuikTrip had violated the act when it sold motor fuel below cost where the effect of that sale was to unfairly di[36]*36vert trade from a competitor or otherwise to injure a competitor. The state claimed that QuikTrip’s below-cost sales at its Herculaneum, Missouri, store required its competitors either to lower their own prices or lose customers; thus, such sales unfairly diverted trade from competitors or otherwise injured them. The Attorney General sought injunctive relief and the imposition of a civil penalty.

QuikTrip argued that the use of the term “unfair” in the act means that there must be predation; therefore, the state must show predatory effect by either demonstrating the intent to destroy competition or actual destruction of competition. QuikTrip also claimed that the act violates the due process guaranty of the constitution because (1) the act is not reasonably related to the problems it seeks to address, and (2) it is impossible for QuikTrip to comply with the act’s terms.

Both parties filed motions for summary judgment. The state initially alleged sales of motor fuel below cost on 76 days. At trial, the parties limited the motion for partial summary judgment to address only 23 days from March 16, 1997, to July 19, 1999, during which QuikTrip store number 611 in Herculaneum, Missouri, sold motor fuel below its costs and below the prices of its competitors.2 QuikTrip concedes that on 22 days over the 33 months in question, it sold diesel fuel below cost and was not then matching a competitor’s price. On one day, it sold unleaded gasoline below cost.

The circuit court granted partial summary judgment in favor of the state. The court ruled that the act satisfied substantive due process and that the state had made its prima facie showing that Quik-Trip had made below-cost sales with the effect of either injuring a competitor or of unfairly diverting trade from a competitor.3 Following QuikTrip’s motion for rehearing and the state’s dismissal of its other allegations based on other dates of selling below cost, the circuit court entered judgment in favor of the state, finding 23 violations of the act and assessing civil penalties against QuikTrip.

The circuit court found that there were no material facts in dispute regarding QuikTrip’s liability for the 23 dates “considering that the statute is constitutional without a predation requirement.” The court stated, “On every day where Quik-Trip priced below cost without a valid statutory defense, there is no dispute that such pricing caused injury to competitors.”

The state may recover civil penalties of $1,000 up to $5,000 per violation of section 416.615. The circuit court ordered QuikTrip to pay the state $75,000, claiming to assess a $3,000 penalty for each day of the 23 days QuikTrip violated the Act.4 QuikTrip appeals.5

[37]*37“To Unfairly Divert Trade” or “Otherwise to Injure a Competitor”

Section 416.615 makes it unlawful for QuikTrip to sell motor fuel below cost if, as the state contends in this case, “the intent or effect of the sale is ... to unfairly divert trade from a competitor, or otherwise to injure a competitor.”

The question is whether the statute protects the QuikTrip competitor from the effects of competition or, more narrowly, protects only against competition that injures a competitor or that unfairly diverts trade from its business.

“The primary rule of statutory construction is to ascertain the intent of the legislature from the language used, to give effect to that intent if possible, and to consider the words used in their plain and ordinary meaning.” Wolff Shoe Co. v. Director of Revenue, 762 S.W.2d 29, 31 (Mo. banc 1988). When construing a statute, the Court considers the object the legislature seeks to accomplish and aims to resolve the problems addressed therein. Gott v. Director of Revenue, 5 S.W.3d 155, 159 (Mo. banc 1999).

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State Ex Rel. Nixon v. QuikTrip Corp.
133 S.W.3d 33 (Supreme Court of Missouri, 2004)

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Bluebook (online)
133 S.W.3d 33, 2004 Mo. LEXIS 40, 2004 WL 615344, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-nixon-v-quiktrip-corp-mo-2004.