Court of Appeal Upholds Two-Tier System of Gasoline Pricing

Metropolitan News-Enterprise

Monday, August 27, 2001

Page 1

Court of Appeal Upholds Two-Tier System of Gasoline Pricing

By a MetNews Staff Writer

Gas stations may continue to charge higher prices to customers who use credit cards rather than cash as long as the differential reflects the actual cost of processing credit transactions, this district’s Court of Appeal ruled Friday.

Div. One granted a writ of mandate directing that summary adjudication be granted in favor of Thrifty Oil Co., which successfully argued that its practice of charging four cents per gallon more for credit card sales represented a legal discount and not an illegal surcharge.

Los Angeles Superior Court Judge Morris B. Jones had denied the company’s motion, ruling that the issue of whether the differential was a surcharge or a discount was a question of fact.

The ruling is the latest in a six-year-old class action against Thrifty, which no longer operates retail stations. The Court of Appeal previously ruled that the suit could not proceed as a class action, but the state Supreme Court reversed last year in Linder v. Thrifty Oil Co. (2000) 23 Cal.3d 429.

Legal Provisions

Named plaintiff Rochelle Linder accused Thrifty of violating two provisions of the Song-Beverly Credit Card Act of 1971—Civil Code Sec. 1748.1, prohibiting surcharges for the use of credit cards, and Sec.1747.8(a)(3), prohibiting the use of a form which requires the customer to provide any “personal identification number,” including a telephone number.

She asked the court to certify a class made up of all persons who used credit cards at Thrifty stations during a three-year period beginning in May 1992 and had to pay more than the cash price, or who had to fill out “prohibited credit card transaction forms.”

Linder contended that although the section prohibiting surcharges specifically permits discounts for using cash if “offered to all prospective buyers,” Thrifty was in violation because it did not offer such discounts at all of its stations.

Following remand, Jones granted summary adjudication as to the forms, but denied it as to the surcharges. Friday’s ruling leaves only one cause of action remaining, a claim that offering two-tier pricing at some but not all stations constituted unfair competition.

Available to All

Justice Miriam A. Vogel concluded Friday that Thrifty’s two-tier pricing didn’t violate the credit card statute, noting that it was available to all customers at each station that employed it, and that prices were displayed, “clear as day,” on signs at each station as well as at each pump.

The plaintiff, Vogel noted, didn’t refute Thrifty’s evidence that the price differential reflected its actual costs of processing the transactions, nor was there evidence that the price structure was established with the design of earning additional profit from credit card customers.

The justice rejected Linder’s reliance on an economist who declared that a “normal price” for gas could be determined by analyzing the company’s retail operations, leading to a valid conclusion as to whether the company was offering a cash discount or a credit card surcharge.

Since the expert did no such analysis, he didn’t establish the existence of a material factual dispute, Vogel concluded. “The expert’s musings about the various means by which a retailer’s “normal price.”