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Aaryan & Pratha, Inc. v. Costco Wholesale Corp.

United States District Court, M.D. Alabama, Northern Division

May 10, 2018

AARYAN & PRATHA, INC., Plaintiff,
v.
COSTCO WHOLESALE CORPORATION, and Costco WHOLESALE MEMBERSHIP, INC. Defendants.

          MEMORANDUM OPINION AND ORDER

          CALLIE V. S. GRANADE, SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendants' Motion for Summary Judgment (Doc. 22-5)[1], Plaintiff's Response in opposition thereto (Doc. 35), and Defendants' Reply (Doc. 40) and on Defendants' Motion to Strike the Affidavits of Wayne Russell, Leslie Watson, and James McGuire (Doc. 41) to which Plaintiff has responded (Doc. 44) and Defendants have replied (Doc. 45). For the reasons explained below, the Court finds that Defendants' Motion to Strike (Doc. 41) is GRANTED in part and DENIED in part and their Motion for Summary Judgment (Doc. 22-5) is DENIED.

         PROCEDURAL BACKGROUND

         Plaintiff, Aaryn & Pratha, Inc. (“A&P”), an Alabama corporation, owns and operates a Shell branded convenience store and retail gas station located at 9264 Boyd Cooper Parkway in Montgomery, Alabama. (Doc. 1; Doc. 35 at 4). Defendants, Costco Wholesale Corporation and Costco Membership, Inc. (collectively “Costco”), are Washington and California corporations, respectively, both engaging in business in Alabama. (Doc. 35 at 4). Costco operates a retail store located at 8251 EastChase Parkway, in Montgomery, Alabama that sells gasoline to its members. (Doc. 22-5 at 8). The gas stations that are operated by the parties are located 0.7 miles apart. (Doc. 22-5 at 8; Doc. 35 at 4).

         On April 18, 2016, Plaintiff filed a Complaint seeking Preliminary and Permanent Injunctive Relief and damages against Defendants alleging Defendants violated the Alabama Motor Fuel Marketing Act (“AMFMA”) 1977 Ala. Code § 8-22-1. (Doc. 1). Specifically, Plaintiff contends that Costco sold regular unleaded gasoline below cost on sixteen separate days from March 2016 to April 2016, in violation of the AMFMA with the intent to injure Plaintiff and other competitors in the same market area. (Doc. 1 at 3-5). Plaintiff alleges that as a result of Defendants' violation, it has suffered irreparable harm and damages, including a decrease in gasoline sales. (Doc. 1 at 3, 5).

         After filing their Answer (Doc. 32)[2], Defendants filed a Motion for Summary Judgment asserting that they are entitled to judgment as a matter of law because they were meeting competition in good faith pursuant to Ala. Code § 8-22-8(b). Plaintiff has responded asserting that Defendants neither acted in good faith nor properly established that the retailers that it matched were competitors under the AMFMA (Doc. 35) and Defendants timely replied (Doc. 40). In support of its response, Plaintiff submitted multiple exhibits including the affidavits of Leslie Watson (“Watson”) (Doc. 35-4), Wayne Russell (“Russell”) (Doc. 35-5), and James McGuire (McGuire”)(Doc. 35-13). Thereafter, Defendants filed a Motion to Strike the Affidavits of Russell, Watson, and McGuire (Doc. 41) to which Plaintiff has responded (Doc. 44) and Defendants have replied (Doc. 45). The motions are now ripe before this Court.

         FACTS

         The Montgomery Costco's gasoline prices are set at least once per day and typically twice per day by Costco's motor fuel department located in King County, Washington. (Doc. 22-5 at 12; Doc. 22-8 at ¶¶¶ 3, 4, 11). Each morning the motor fuel department reviews information from www.app.opispricepro.com ("PricePro") - a retail gasoline comparative pricing tool - that compares the Montgomery Costco's gasoline prices to pre-selected area competitors. (Doc. 22-5 at 12; Doc. 22-8 at ¶ 5). After reviewing the competitors' prices, the fuel department sets Costco's price, frequently resulting in matching the price of a competitor. (Doc. 22-5 at 13; Doc. 22-8 at ¶ 10). Costco's motor fuel department typically repeats this process in the late afternoon during weekdays using PricePro data collected throughout the day. (Doc. 22-5 at 13; Doc. 22-8 at ¶ 11). Once the fuel department sets the price of gasoline, Costco employees change the relevant advertisements to reflect the updated gas price. (Doc. 22-5 at 13; Doc. 22-8 at ¶ 12).

         According to Costco, there are sixteen competitors that it daily reviews using PricePro, all of which sell the same product - regular unleaded gasoline - and all of which are located within a 7.5 mile radius of the Montgomery Costco. (Doc. 22-5 at 10, 16; Doc. 22-8 at ¶¶ 7, 8). Certain of these competitors are pre-selected by Costco's motor fuel department “based on the competitor's location, pricing history, distance from [Costco's] retail stores, and market data on the home or business location of [Costco's] members/customers.” (Doc. 22-5 at 9; Doc. 22-8 at ¶ 6). Costco tracks the location of its members who actually buy gasoline at the Montgomery location and tracks the gasoline retailers located near the homes and/or businesses of Costco gasoline buying customers. (Doc. 40 at 5; Doc. 22-7 at 3-6). On the sixteen days at issue in the Complaint, Costco asserts it was meeting the price of either the Quick Serve on Wares Ferry Road, Sam's Club on Eastern Boulevard, Liberty on Atlanta Highway, Mapco on Vaughn Road, or Valero on Vaughn Road. (Doc. 22-5 at 20-21; Doc. 22-8 at 14-18).

         In its response, A&P does not dispute the above stated facts. Rather, it argues that the gas retailers selected and identified by Costco are not competitors under the AMFMA and that Costco did not act in good faith when it met the price of those alleged competitors. (Doc. 35, generally). A&P has presented facts that the five retailers that Costco used as competitors are located more than five miles from Costco, on different roads, on different traffic routes, and are either not equipped to sell or do not typically sell a significant amount of gas so as to be true competitors of Costco. (Id.). A&P also submitted affidavits of retail gasoline marketers stating that local gasoline retailers do not consider several of Costco's alleged competitors to be realistic competitors and stating that Costco does not consider several gas retailers as competitors that are closer in proximity to it and are on same road or traffic thoroughfare as its tracked competitors. (Id.). Costco does not dispute the facts presented by A&P.

         DISCUSSION

         A. Motion to Strike

         Given that a determination on Defendants' Motion to Strike will potentially impact the analysis of Defendants' Motion for Summary Judgment, this Court will address Defendants' Motion to Strike first.

         Because the challenged affidavits were submitted in opposition to a motion for summary judgment, they must comply with the requirements of Rule 56(e) of the Federal Rules of Civil Procedure. Rule 56(e) provides that an affidavit opposing a motion for summary judgment “shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.” Fed.R.Civ.P. 56(e)(emphasis added). Affidavits which set forth conclusory arguments rather than statements of fact based on personal knowledge are improper. See, e.g., Thomas v. Ala. Council on Human Relations, Inc., 248 F.Supp.2d 1105, 1112 (M.D. Ala. 2003); Story v. Sunshine Foliage World, Inc., 120 F.Supp.2d 1027, 1030 (M.D. Fla. 2000). Accord, Leigh v. Warner Bros., Inc., 212 F .3d 1210, 1217 (11th Cir. 2000).

         Sworn statements which fail to meet the standards set forth in Rule 56(e) may be subject to a motion to strike. See, e.g., Thomas, 248 F.Supp.2d at 1112; Givhan v. Electronic Eng'rs, Inc., 4 F.Supp.2d 1331, 1334 (M.D. Ala. 1998). The motion to strike should state precisely the portions of the affidavit to which objection is being made, and the grounds therefor. Givhan, 4 F.Supp.2d at 1334 citing to Olympic Ins. Co. v. H.D. Harrison. Inc., 418 F.2d 669, 670 (5th Cir. 1969). However, the Court need not strike the entire affidavit, rather it may strike or disregard the improper portions and consider the remainder of the testimony or statement. Givhan, 4 F.Supp.2d at p. 1334 n. 2. In the context of a non-movant's burden on summary judgment, the Eleventh Circuit “has consistently held that conclusory allegations without specific supporting facts have no probative value” and cannot defeat a well-supported motion for summary judgment. Evers v. General Motors, 770 F.2d 984, 986 (11th Cir. 1985)(citations omitted).

         Furthermore, Federal Rule of Evidence 702 permits a person qualified as an expert to testify in the form of an opinion if, among other reasons: “(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.” Fed.R.Evid. 702. “A district court is thus required to act as a gatekeeper ‘to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the practice of an expert in the relevant field.'” McDowell v. Brown, 392 F.3d 1283, 1299 (11th Cir. 2004) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999)).

         Defendants' seek to strike the expert testimony of Wayne Russell, Leslie Watson, and James McGuire because their testimony “is conclusory and unreliable, and, therefore, does not meet requirements Federal Rule of Evidence 702 for at least four reasons: (1) the Purported Experts expressly disclaim that they are experts; (2) the Purported Experts admit that their opinions are not based upon sufficient facts or data or are otherwise arbitrary; (3) the Purported Experts' testimony goes to a party's state of mind, which is not the proper subject of expert testimony; and (4) the Purported Experts' testimony reaches legal conclusions that are reserved to the determination of this Court.” (Doc. 41 at 3)(emphasis removed). In response, Plaintiff states “it is [the] breadth of experience that forms the foundation and the basis of these gentlemen to offer the testimony now attacked by Costco regarding the gasoline markets at issue; who a competitor is and who a competitor is not with respect to a given facility by analyzing the nature of the facility including volumes of fuel sold; distances from competitors including Costco; whether a location is on the same traffic pattern as a competitor at another location including Costco, etc.” (Doc. 44 at 3).

         Wayne Russell (“Russell”) is the President of Russell Petroleum Corporation (“Russell Corp.”), an Alabama Corporation located in Montgomery, Alabama, in the wholesale and retail gasoline business. (Doc. 35-5 at 1). Mr. Russell has been in the gasoline business in Central Alabama, including in the City of Montgomery for forty-nine years during which time he has marketed gasoline to every market within the city. Russell Corp. supplies fuel to forty-two locations in the City of Montgomery and surrounding communities known as “Kwik Shop” and “PetroPlus”. (Id.) Mr. Russell has surveyed competitive pricing and priced gasoline over the course of his forty-nine years to the Russell Corp. locations. (Id.)

         Leslie Watson (“Watson”) is President of Tom Jones, Inc., an Alabama Corporation that, among other things, markets gasoline at retail in Alabama, including in the City of Montgomery. (Doc. 35-4 at 1). Mr. Watson has worked in the gasoline business for fifty-two years and during that time he has marketed gasoline in every market within the City of Montgomery. (Id.) He has additionally surveyed competitive pricing throughout the City of Montgomery and beyond for 32 years and his employer supplies fuel to thirteen locations within the City of Montgomery and Montgomery and Autauga Counties in facilitates branded as “Liberty.” (Id.)

         James McGuire (“McGuire”) is the President of McGuire Oil Company based in Mobile, Alabama, which is principally a Chevron-branded distributor of motor fuel products. (Doc. 35-13 at 2). McGuire Oil has been in the gasoline business for over forty-eight years and supplies approximately sixty locations throughout Southwest Alabama, the Panhandle of Florida, and Southeast Mississippi. (Id.). James McGuire has personally been in the gasoline business for approximately forty-eight years.

         1. Disclaimer of Being Experts

         Costco first asserts that all three affidavits should be stricken because each of the affiants disclaim being experts. (Doc. 41 at 3-5). Specifically, Costco points to the following testimony in support of exclusion:

Q: Mr. Russell, you have given an affidavit in the case we're here about today. I believe that you've been offered up as an expert in the case that we're here about today. Is that what you understand as well?
A: I'm not an expert, but I've been in the business a long time.
[…]
Q: . . . Have you ever been retained as an expert in any litigation?
A: No expert. I'm not an expert.”

(Doc 41 at 4)(internal citations omitted). Costco further points out that Mr. Russell (1) has never been qualified as an expert in motor fuel in any place for any purpose, (2) has no specialized training or education about motor fuel pricing, and, (3) did not personally set prices for any of his owned retail locations, and has not for over a decade. (Doc. 41 at 4)(internal citations omitted). Similarly, when asked by Costco whether he was an expert, Mr. Watson stated that he (1) did not regularly hold himself out as an expert, (2) had never previously offered expert testimony or been qualified by a court to do so, (3) had never prepared any documents on the gasoline retail market in Montgomery outside of pricing surveys, and (4) had never conducted any research on consumer sensitivity to gasoline prices. (Id.)(citations omitted). Finally, when asked whether he was giving expert testimony, Mr. McGuire, stated “[w]ell, I'm not saying to anybody I'm an expert to testify today” and, thereafter, stated “I think I can answer your question. I think a legal term, no judge has ever declared me an expert. I've never known myself out --put myself out as an expert. I've been in this business for a long time, so I have a lot of experience in the gasoline wholesale and retail business, but I don't consider myself an expert . . . in anything. . . I don't claim to be an expert.” (Doc. 41 at 5) (internal citations omitted). Mr. McGuire also stated that he had never given prior testimony as an expert or been designated as an expert and he had never offered a prior expert report. (Doc. 41 at 5) (internal citations omitted).

         With regard to Defendants' first ground for excluding the affidavits, this Court finds Defendants' position to be without merit. While Rule 702 requires specialized knowledge and skill before one can be considered an expert, the Court is unaware of any requirement that the purported expert hold themselves out to be an expert and Defendant has provided this Court with no case law to support such a position. Whether or not someone considers themselves to be an “expert” has no bearing on whether or not their opinions can be considered as expert testimony based on their education, knowledge, and experience under Federal Rule of Evidence 702.

         2. Insufficient Facts or Data

         Costco next asserts that all three affidavits should be excluded because the affiants' testimony is not based on sufficient facts or data. (Doc. 41 at 5-8). Specifically, Costco argues that McGuire's affidavit suggests he has specialized knowledge of the legislative history of the AMFMA, but when asked about his involvement with the passage of the AMFMA, Mr. McGuire testified that he didn't know where the language for the AMFMA came from, that he didn't know “the procedure of how [the AMFMA] got passed”, that he didn't know who the Senate sponsor for the bill was, he didn't know what committees were involved in the passage of the AMFMA, and most importantly that he did not have any input at all on the definition of the terms “competitor” or “market area” under the AMFMA. (Doc. 41 at 6)(internal citations omitted). Costco contends, therefore, that “Mr. McGuire's testimony regarding the AMFMA -in addition to reaching impermissible legal conclusions, as discussed below -is unreliable and irrelevant.” (Id.)

         Costco also takes issue with Mr. Watson's testimony because he (1) was not involved with the passage of the AMFMA, (2) did not know where his customers lived, (3) did not know how far individuals were willing to drive in order to take advantage of better pricing, (4) did not have any direct experience with PricePro or GasBuddy, (5) did not know where Costco bought its gasoline from or at what price, and (6) provided testimony noting his opinion that Costco should not consider retailers with sales volume of less than 50, 000 gallons per month was “an arbitrary line.” (Doc. 41 at 6-7)(internal citation omitted). Accordingly, Costco contends, “[h]is testimony in this case is not based on sufficient facts or data, but is admittedly conclusory and ‘arbitrary'” and “is due to be excluded.” (Id. at 7).

         Lastly, Costco points out that Mr. Russell was (1) not involved with drafting the language of the AMFMA, (2) did not know where his customers lived, (3) did not know how far individuals were willing to drive in order to take advantage of better pricing, (4) did not know where Costco's customers lived or worked, and (5) did not know how Costco selected its prices. (Id. at 7-8). (internal citation omitted). As a result, Costco contends Mr. Russell's testimony in is “conclusory and based on insufficient facts and data” and “is due to be excluded.” (Id.)

         While there is no dispute that the above classification of the testimony of Russell, Watson, and McGuire is accurate, Costco fails to make any argument that the absence of the above knowledge justifies exclusion of the respective affidavits in their entirety. More specifically, Costco does not assert how the above testimony establishes that all of the information and every opinion within the affidavits should be excluded or that none of the affiants could potentially be experts for the sake of offering any opinion based on their experiences as market retailers in Montgomery. As such, Costco's argument seeking total exclusion of the relevant affidavits based on a lack of sufficient facts and data is denied. To the extent that Costco seeks to exclude portions of the relevant testimony based on lack of the above-discussed information, Costco does not indicate which specific opinions it seeks to exclude beyond its request to exclude “testimony regarding AMFMA”. (Doc. 41 at 6). Such a generalization fails to identify the specific portions of each affidavit that Costco seeks to exclude. See Givhan, 4 F.Supp.2d at 1334 (“The motion to strike should state precisely the portions of the affidavit to which objection is being made, and the grounds therefor.”) citing to Olymp ...


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