Klein v. Chevron U.S.A., Inc.
202 Cal. App. 4th 1342
| Cal. Ct. App. | 2012Background
- Plaintiffs sue Chevron U.S.A., Inc. for UCL, CLRA, breach of contract, and unjust enrichment over selling retail motor fuel in volumetric gallons without temperature compensation.
- Retail fuel is sold around 70°F while wholesale is measured at 60°F, causing thermal expansion that reduces mass and energy per gallon at retail.
- ATC technology can compensate for temperature, but California agencies have not mandated its use; CEC cost-benefit analysis suggested net costs to consumers.
- Trial court dismissed UCL unlawful and unjust enrichment claims and sustained demurrers; CLRA and UCL unfair/fraudulent claims were preliminarily viable.
- Chevron moved for judgment on the pleadings to abstain under the judicial abstention doctrine based on the CEC report; trial court granted; appellate review ensued.
- CEC later issued a cost-benefit report (2010) indicating ATC would not benefit consumers overall, but the court’s abstention ruling focused on whether abstention was appropriate given remaining factual questions and remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court properly abstained under judicial abstention. | Chevron abstained improperly; facts and remedies not limited to ATC. | Abstention appropriate due to complex economic policy and regulatory framework. | Abstention was abuse of discretion; do not abstain. |
| Whether plaintiffs stated a viable unlawful prong claim under UCL. | Non-temperature-adjusted gallons and tax overcharges plausibly unlawful. | No predicate statute; lawful to sell non-temp-adjusted fuel; no unlawful act. | Viable under unlawful prong. |
| Whether plaintiffs stated a viable fraudulent prong claim under UCL and CLRA. | Misleading price/quantity due to temperature effects qualifies as fraud. | Claims fail to show consumer expectation; misinterpretation not proven. | Viable fraudulent UCL and CLRA claims. |
| Whether breach of contract and unjust enrichment claims were proper. | Gallon term and taxes language reasonably construed to require temperature-adjusted or accurate tax remittance. | Gallon defined by statute as 231 cubic inches at any temperature; no contractual ambiguity. | Breach of contract claim dismissed; unjust enrichment claim affirmed as to lack of basis. |
Key Cases Cited
- Wolfe v. State Farm Fire & Casualty Ins. Co., 46 Cal.App.4th 554 (Cal. Ct. App. 1996) (abstention when regulatory remedies exist)
- Shamsian v. Department of Conservation, 136 Cal.App.4th 621 (Cal. Ct. App. 2006) (abstention where regulatory scheme addresses activity)
- Alvarado v. Selma Convalescent Hospital, 153 Cal.App.4th 1292 (Cal. Ct. App. 2007) (abstention where state department enforces statute)
- Biological Diversity, Inc. v. FPL Group, Inc., 166 Cal.App.4th 1349 (Cal. Ct. App. 2008) (abstention when regulatory proceedings underway)
- Arce v. Kaiser Foundation Health Plan, Inc., 181 Cal.App.4th 471 (Cal. Ct. App. 2010) (rejects abstention based on future regulation)
- Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (Cal. 1999) (safe harbor requires explicit prohibition or permission)
- McCann v. Lucky Money, Inc., 129 Cal.App.4th 1382 (Cal. Ct. App. 2005) (disclosing costs/profits not per se unfair; depends on context)
- Bardin v. DaimlerChrysler Corp., 136 Cal.App.4th 1255 (Cal. Ct. App. 2006) (fraudulent prong requires public expectation)