Alvarez v. Chevron Corp.
656 F.3d 925
| 9th Cir. | 2011Background
- Six retail fuel purchasers allege that single-nozzle dispensers cause residual fuel from prior transactions, leading to overcharging when buying higher-octane fuel.
- Plaintiffs ask for technological fixes, pricing adjustments for residual fuel, or corrective disclosures on pumps as remedies for the residual fuel problem.
- California regulates dispenser design via the Division of Measurement Standards (DMS), requiring certification and seals for lawful devices under Cal. Bus. & Prof. Code §§ 12500 et seq.
- Handbook 44 standards prohibit draining and require price selection before delivery; California ARB also requires single-nozzle, single-hose dispensers for facilities installed since 2003.
- Plaintiffs plead six California-law claims (contract, breach of good faith and fair dealing, express/implied warranties, CLRA, UCL, FAL) and seek relief that would alter dispensing or disclosures.
- Defendants move to dismiss under Rule 12(b)(6) arguing regulatory compliance permits conduct, and preemption and abstention defenses apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does California regulation preclude liability for residual-fuel claims? | Alvarez argues residual-fuel issues are actionable despite regulation. | Defendants say design and pricing are mandated by California to be compliant and thus not actionable. | Yes; regulatory framework provides safe harbor; claims fail. |
| Are common-law contract/warranty claims barred for lack of pre-suit notice? | Plaintiffs claim they provided notice when discovering the breach. | Notice must be pre-suit and not simultaneous with filing. | Plaintiffs failed to provide reasonable pre-suit notice; claims dismissed. |
| Do UCL/CLRA claims survive safe harbor given regulated conduct? | Defendants’ actions are deceptive/unlawful under statute. | Safe harbor applies; regulated conduct cannot be deemed unlawful under UCL/CLRA. | Yes; safe harbor applies; claims dismissed. |
| Is the False Advertising Law preempted by PMPA and FTC Posting Rule? | Plaintiffs seek additional corrective disclosures at point of sale. | PMPA and Posting Rule regulate octane labeling; no room for extra disclosures. | Yes; FAL claim expressly preempted. |
Key Cases Cited
- Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Tel. Co., 83 Cal.Rptr.2d 548, 973 P.2d 527 (Cal. 1999) (safe harbor limits UCL when legislature permits conduct)
- Cardinal Health 301, Inc. v. Tyco Elecs. Corp., 169 Cal.App.4th 116, 87 Cal.Rptr.3d 5 (Cal. Ct. App. 2008) (pre-suit notice required under Cal. Civ. Code § 2607(3)(A))
- Hampton v. Gebhardt's Chili Powder Co., 294 F.2d 172, 173-74 (9th Cir. 1961) (notice can precede filing; context ofCalifornia law later refined)
- Stearns v. Select Comfort Retail Corp., 763 F.Supp.2d 1128 (N.D. Cal. 2010) (pre-suit notice required to avoid dismissal for contract claims)
- Bourgi v. W. Covina Motors, Inc., 166 Cal.App.4th 1649, 1658-60, 83 Cal.Rptr.3d 758 (Cal. Ct. App. 2008) (safe harbor analysis under CLRA context)