In re California Gasoline Spot Market Antitrust Litigation

Background

Plaintiffs filed a proposed class action alleging that SK Trading International Co., Ltd., SK Energy Americas, Inc., Vitol Inc., Lucas, and Niemann entered agreements to restrain competition in the California spot market for gasoline and gasoline blending components. Plaintiffs alleged that the defendants coordinated trades reported to the Oil Price Information Service to inflate prices tied to separate supply contracts, and that this conduct caused gasoline purchasers to pay higher prices.

The operative complaint asserted claims under the federal Sherman Act, the California Cartwright Act, California’s Unfair Competition Law, and a common-law unjust-enrichment theory. The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. They also moved to stay, or pause, the federal case because the California Attorney General had filed a related action in state court.

Motion to Dismiss

The court denied dismissal of the Cartwright Act claim. It held that plaintiffs plausibly alleged a horizontal price-fixing agreement through allegations about confidential cooperation, communications between the traders, concealed transactions, manipulation of trades reported to the market-pricing service, and inflated contract prices. The court also held that plaintiffs adequately pleaded causation and antitrust injury at the complaint stage. It concluded that the possibility of other factors affecting gasoline prices did not resolve causation on a motion to dismiss.

The court granted dismissal of the Sherman Act claim because plaintiffs sought only injunctive relief and had not shown a sufficiently imminent threat of future injury. The alleged conduct occurred in 2014 through 2016, and the complaint did not plausibly allege that the effects continued into 2021 or that similar conduct was certainly impending. The dismissal was with leave to amend.

The court granted dismissal of the Unfair Competition Law claim because plaintiffs did not adequately allege that their legal remedies, including damages, were inadequate before seeking equitable remedies such as restitution or an injunction. That claim was dismissed with leave to amend to the extent plaintiffs had a good-faith basis to allege inadequate legal remedies.

The court denied dismissal of the unjust-enrichment claim. Plaintiffs sought non-restitutionary disgorgement of profits, which the court treated as different from the restitution sought under the Unfair Competition Law. The defendants did not show at this stage that the unjust-enrichment claim overlapped with the damages claim.

The court also denied the defendants’ motion to dismiss the Cartwright Act claims as untimely. Plaintiffs adequately alleged delayed discovery and fraudulent concealment, which could toll the limitations period. The court separately stated that the motion to dismiss on the discovery-rule ground was denied without prejudice.

Overall, the court granted in part and denied in part the motion to dismiss: dismissal was granted as to the Sherman Act and Unfair Competition Law claims, and denied as to the Cartwright Act and unjust-enrichment claims.

Motion to Stay

The court denied the motion to stay under the Colorado River doctrine. That doctrine permits a federal court, in limited circumstances, to pause a case because of a parallel state proceeding. The court found substantial doubt that the state Attorney General’s action could resolve this federal case because the cases involved different potential plaintiffs and classes, including businesses and people outside California in the federal case, and because the federal case included claims and defendants not present in the state action.

The court also denied the request for a stay under its inherent authority to manage its docket. It concluded that this authority could not provide an alternative basis for the same stay after the defendants failed to satisfy the strict requirements for a Colorado River stay.

Other Orders and Case Status

The court stated that any amended complaint was due within 30 days. It denied as moot the parties’ joint discovery letter concerning a subpoena to the Oil Price Information Service and lifted the discovery stay for the surviving claims. The order disposed of Docket Nos. 222, 224, and 280.