City Market and the Submarine Captain

As prices at the pump continue to climb and the price of oil briefly hit $120 a barrel earlier this week, the Tenth Circuit's decision in Parish Oil Co. v. Dillon Companies, Inc., No. 07-1032, which was issued last Friday, is particularly relevant.  The Court held, per Judge McConnell, that under the Colorado Unfair Practices Act (CUPA), a grocery store may sell gas below cost if the sales are conditioned on the purchase of enough groceries above cost that the entire series of transactions comes in at a profit.  Relevancy aside, the court also used a Seinfeld episode to illustrate its point.

The case involved City Market's discount program aimed at boosting grocery sales by giving customers a break at the gas pump if they spent a certain amount on groceries.  Two retail filling stations brought suit, arguing that the program violated the CUPA.  The stations won at trial, with the jury awarding more than $1.4 million against City Market.  The Tenth Circuit reversed, holding that the plain language of the CUPA allowed the kind of "bundled sales" promoted by City Market; thus, even though City Market sells gas below cost, it is not unlawful so long as City Market does not sell below cost for the entire transaction. 

As the court explained, City Market's program is no different from a fast-food chain which sells a value meal at a profit, even though it might throw in part of the meal, such as a milk shake, below cost.  The court also noted that the district court's reading of the CUPA would render illegal a practice so common that it was featured in a 1997 episode of Seinfeld:

Jerry:  "Atomic Sub"?  Why are you eating there?

Elaine:  I got a card, and they stamp it every time I buy a sub.  Twenty-four stamps, and I become a Submarine Captain!

Jerry:  What does that mean?

Elaine (embarrassed):  Free sub.

I looked for this scene on YouTube, but couldn't find it.  (However, although it's totally irrelevant to the decision, this still cracks me up.  Sweet Fancy Moses!)

As an aside, this continues Judge McConnell's entertaining habit, which I noted last year, of sprinkling his opinions with pop-culture references.  However, I couldn't help noting that in the fact section the decision states that one of the City Market stores was "in 'downtown' Montrose."  As a native of a very small New Mexico town not that far from Montrose, I took offense at the rather condescending use of the quotation marks around the word "downtown."  But on further reflection, it doesn't bother me that much.  Everything's relative, after all.  Certainly downtown Montrose is nothing compared to the downtown of a "metropolis" like Salt Lake City.

Congrats to my law school classmate and erstwhile colleague Tim Macdonald, who represented City Market on appeal.

Comments

[peteSmith]

Instead of making a habit out of sprinkling select opinions with pop-culture references, McConnell should, instead, make a habit out of giving all briefs an equal measure of review (which starts with reading the briefs), respecting stare decisis (viz., applying S.Ct. binding precedents) and applying the standard of review (de novo, where appropriate) that certain legal issues warrant. To do otherwise (which he presently does through memdispos and unpublished opinion practice), violates both the Due Process Clause and the Equal Protection Clause, as well as the fundamental right of access to the courts. We expect such violations from the state and private parties, but not from the courts, who sit in judgment over such violations.

[RK]

If appellate judges spent 40 hours a week doing their jobs, instead of delegating 90% of their work to kids right out of law school (and in some cases, still in law school) we might have something in this Circuit that looks like competent appellate review. Judge McConnell's job is not to entertain us, but to review lower court decisions for error.