Wilson v. Circle K Stores, Inc.
872 F.3d 1094
| 10th Cir. | 2017Background
- This multidistrict litigation challenged fuel retailers for selling gasoline by volume without adjusting for temperature (alleged energy/measurement shortfall). Multiple class settlements were negotiated; the District of Kansas approved several settlements and releases, including a conversion settlement with Costco requiring implementation of Automatic Temperature Control (ATC) on a multi-year schedule.
- Costco’s settlement (Costco Agreement) included Section 4.7 allowing Costco to adopt later, materially more favorable agreements that "concern[] ATC"—but limits adoption to terms replacing Costco’s obligations under Section 4.4 (the implementation schedule).
- Plaintiffs later entered a Stipulation dismissing claims against certain defendants without any ATC commitments. Costco sought to invoke Section 4.7 to adopt those more favorable terms; the district court denied Costco’s request. Costco appealed the contract interpretation.
- Two groups of objectors (Alkon and non‑settling defendants led by Speedway) challenged approval of ten settlement agreements (conversion settlements with Costco and Valero and eight fund settlements); objectors raised First Amendment, Article III, separation-of-powers, Rule 23, and attorney‑fee conflicts objections.
- The Tenth Circuit affirmed: (1) the district court correctly interpreted Section 4.7 as limited to agreements that concern how ATC is implemented (i.e., Section 4.4 obligations), not whether to implement ATC at all; and (2) the district court did not abuse its discretion in approving the settlement agreements or certifying the classes. Speedway lacked standing; Alkon had standing only to challenge ten settlements.
Issues
| Issue | Plaintiff/Alkon (or Costco) Argument | Defendant/Settling Parties (or Plaintiffs below) Argument | Held |
|---|---|---|---|
| Whether Section 4.7 of the Costco Agreement allows Costco to adopt a later agreement that eliminates ATC obligations (i.e., substitute "no ATC") | Costco: the phrase "concerning ATC" modifies "action/claim" (last antecedent rule) and Section 4.7 permits adoption of materially more favorable terms including zero conversion | Plaintiffs & district court: parenthetical examples and explicit reference to Section 4.4 show the phrase limits triggering agreements to those about how to implement ATC (conversion percentage, rate, completion date); Section 4.7 only allows substitution of Section 4.4 obligations | Affirmed — Section 4.7 limited to agreements concerning how (timing/extent) ATC is implemented (Section 4.4), not to eliminate obligations in Sections 4.2/4.3 |
| Standing of non‑settling defendant objector (Speedway) to challenge settlements | Speedway: plain-legal-prejudice, Bond prudential/federalism argument, or class‑member status provides standing | Plaintiffs & district court: non‑settling defendants generally lack Article III standing to attack settlements absent plain legal prejudice; Speedway failed to show that or to comply with notice/class‑member identification rules | Affirmed — Speedway lacks Article III standing; its class‑member objections were untimely or not properly presented |
| Whether approval of fund settlements (payments to state regulators/administrative programs) violates the First Amendment or constitutes state action | Alkon: funding of regulatory advocacy is compelled speech/state action because judicial approval makes private settlements effectively state‑action; Shelley extends to this context | Plaintiffs & district court: settlement approval and enforcement are private conduct; Shelley has been confined to racial‑discrimination context and does not convert these private settlements into state action | Affirmed — no state action implicated; First Amendment challenge fails |
| Whether district court abused discretion in approving settlements (Rule 23(e), Rule‑enabling/Article III concerns, attorney‑fee conflicts, and class certification superiority) | Alkon: settlements provide little/no compensatory value, principally benefit class counsel via large fees, seek policy change (impermissible), and thus violate Rule 23(e)/Article III/Rule‑enabling Act; class certification is not superior if no compensatory relief is feasible | Plaintiffs/district court: settlements confer informational/consistency benefits and reimburse conversion costs; courts may approve settlements delivering non‑monetary benefits; substantial litigation record and reasoned findings show fairness; attorney’s fees may be large but are not dispositively improper given societal value and work performed | Affirmed — no abuse of discretion: district court adequately considered objections, found class benefit (informational and facilitative of ATC), addressed fee issues, and permissibly certified the class under Rule 23(b)(3) |
Key Cases Cited
- In re Universal Serv. Fund Tel. Billing Practice Litig., 619 F.3d 1188 (10th Cir.) (standard of review for contract interpretation and appellate review)
- State v. Larson, 184 Wash.2d 843 (Wash. 2015) (applying ejusdem generis despite phrase "including, but not limited to")
- Bond v. United States, 564 U.S. 211 (2011) (distinction between Article III and prudential standing/federalism arguments)
- In re Integra Realty Res., Inc., 262 F.3d 1089 (10th Cir.) (non‑settling parties generally lack standing to challenge settlements except for plain legal prejudice)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (class certification and fairness concerns in class settlements)
- Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180 (10th Cir.) (standard for reviewing district court approval of class settlements)
- New England Health Care Emps. Pension Fund v. Woodruff, 512 F.3d 1283 (10th Cir.) (district court must explain analysis when approving settlements; failure may warrant reversal)