STEPHENSON OIL COMPANY v. CITGO PETROLEUM CORP

trike Testimony of Pl.'s Proposed Expert Regarding Injury 3-5.) Stephenson argues that: (1) its injury is simply that "it paid more for gasoline than its contract with Citgo required it to pay;" (2) whether the availability theory does or does not support a finding of § 2-305(2) injury goes to the merits of its case and may not be decided at the class-certification stage; and (3) it has demonstrated, as a factual matter, that Favored Distributors had formula prices "available" to them at the Tulsa terminal. ( See Pl.'s Resp. to Def.'s Mot. to Strike Testimony of Pl.'s Proposed Expert Regarding Injury 2-8.)

The proposed class period is July 1, 2004 to the present.

Due to the relative newness of the availability theory and the Court's allowing Mukamel to submit certain exhibits following the class-certification hearing, much of the standing debate is contained within briefing regarding Mukamel's testimony. The Court has also considered all standing arguments made in the briefing on the Motion for Certification.

1. Does Availability of Good-Faith Price to Favored Distributors at Tulsa Terminal Give Rise to Concrete Injury to Stephenson?

As explained above, Stephenson's original theory of injury asserted in the Amended Complaint was that it, as a representative of a class of Disfavored Distributors, paid the bad-faith price (in this case, the rack price), while Favored Distributors at the same terminal paid the good-faith price (in this case, the formula price). ( See Am. Compl. ¶ 51.) This injury, however, did not occur. It is undisputed, at this point in the proceedings, that no Favored Distributor was charged or ultimately paid the formula price at either terminal from which Stephenson lifted gasoline during the class period. In addition, the Court has rejected the straight breach theory as untimely, and any injury suffered by virtue of a straight breach theory is rejected. Therefore, Stephenson's standing must be predicated on the injury of paying the bad-faith price, while a Favored Distributor had the good-faith price available to it at the Tulsa terminal. For purposes of the Motion for Certification only, the Court accepts Stephenson's proposed definition of availability as "contractually available." ( See Pl.'s Resp. to Def.'s Mot. to Strike Testimony of Pl.'s Proposed Expert Regarding Injury 5-8 (arguing that 4 — Front and Truman had formula price "available" to them by virtue of their

Based on this ruling, the Court rejects Stephenson's argument that its injury was simply paying "more for gasoline than its contract with Citgo required it to pay." For the same reasons explained infra Part II.A, the Court's standing analysis is limited to whether Stephenson has standing to assert a § 2-305(2)-based breach of contract claim.

contracts).) Thus, Stephenson's argument at trial would be as follows: the rack price it paid was a bad-faith price under § 2-305(2) because such price was discriminatory and/or commercially unreasonable, in light of the good-faith price contractually available to at least one Favored Distributor at the Tulsa terminal. For purposes of Article III standing, the Court must determine if mere contractual availability of the good-faith price to a Favored Distributor gives rise to a sufficiently "concrete" and "actual" injury to Stephenson.

Case law indicates that there is not a single type of "injury" flowing from bad-faith setting of an open-price term prohibited by § 2-305(2). Instead, the injury and measure of damages depend on the type of bad-faith pricing at issue and the facts of each case. See, e.g., Tom-Lin Enter., Inc. v. Sunoco, Inc., 349 F.3d 277, 283-86 (6th Cir. 2003) (indicating that, where allegations involve subjective bad faith, such as adopting a business plan to increase "jobber retailers" relative to the number of independent dealers in the area, injuries might involve lost profits and reduced revenue) (finding that claims could not survive summary judgment because, inter alia, no such injuries were alleged); Mathis v. Exxon Corp., 302 F.3d 448, 459 (5th Cir. 2002) (injury resulting from price setting with subjective, bad-faith motive to drive the plaintiffs out of business was "loss of competitive position and profit" to plaintiff franchisees); Schwartz v. Sun Oil Co., Inc., No. 9672862, 1999 U.S. Dist. LEXIS 22257 (E.D. Mich. Dec. 9, 1999) (alleged injury was having to pay a discriminatory and commercially unreasonable price; jury awarded damages that were purportedly based on difference between bad-faith price the plaintiff paid and good-faith price the plaintiff would have received) (trial court set aside the verdict based on insufficient evidence of price discrimination or commercial unreasonableness); Shell Oil Co. v. HRN, Inc., 144 S.W.3d 429, 436 (Tex. 2004) (indicating that, if allegations are subjective dishonesty in application of a non-discriminatory, commercially reasonable price, a plaintiff must allege a "commercial injury distinct from the price increase itself"); United Energy Distribs., Inc. v. ConocoPhillips Co., No. 07-CV-2644, 2008 WL 4458991, at *8-9 (D.S.C. Sept. 30, 2008) (applying Shell Oil Co. and concluding that alleged loss of value of incentive payments due under contracts, as a result of alleged bad-faith pricing, may constitute a commercial injury distinct from the price increase itself).

The leading treatise on the UCC provides that if a seller fixes an open-price term in bad faith, the buyer "may treat the sale as cancelled." 2A Lawrence's Anderson on the Uniform Commercial Code, § 2-305:32 (entitled "Requirement of good faith — Remedy for bad faith determination of price"). This remedy is not sought by Stephenson. The treatise further provides that a party that refuses to negotiate the open price term in good faith is liable for breach of contract, see id., which is also not relevant here. These were the only two "remedies" explained in the treatise.

In this § 2-305(2) case, Stephenson's claimed injury is paying the bad-faith price each time it made a purchase at the Tulsa terminal, while a good-faith price was contractually available to a Favored Distributor for its purchases at the Tulsa terminal. Stephenson seeks to recover as damages the price differential between the bad-faith price it paid and the good-faith price it should have paid. ( See, e.g., Doc. 204, Pl.'s Exs. 98 and 103 (calculating Stephenson's damages for April 2006 as difference between rack price it paid and Truman's available formula price, and calculating damages for July 2004 as difference between rack price it paid and 4-Front's available formula price).) In support of this theory of injury and damages, Plaintiff relies upon Schwartz v. Sun Oil Company, Incorporated, No. 96-72862, 1999 U.S. Dist. LEXIS 22257 (E.D. Mich. Dec. 9, 1999) (" Schwartz I"). In that case, the plaintiffs were operators of retail service stations in the Flint, Michigan area,

Stephenson's sole theory of injury is being overcharged, and the only damages Stephenson seeks to recover is the price differential. Stephenson has not alleged any other injury, such as lost profits or other competitive injury.

At the class-certification hearing, the Court asked Stephenson if it was aware of any authority other than Schwartz I discussing injury and damages in a similar § 2-305(2) price discrimination case. Stephenson's counsel indicated that he was not.

and the defendant was a refiner and marketer of oil who set an open-price term in the plaintiffs' agreements. The plaintiffs brought claims under the Robinson-Patman Act and Michigan's equivalent of § 2-305(2). The court referred to the § 2-305(2) claims as the "open-price claims." After a ten-day trial, a jury awarded the plaintiffs $132,855 in damages on the open-price claims.

At trial, the jury was instructed as follows with respect to damages on the open-price claims:

If you find Sun did not set its prices in good faith, plaintiffs may recover as damages the difference between the price . . . they paid for motor fuel and the good faith price, as defined in these instructions, they would have paid. It is the plaintiffs' burden of proof, however, to prove what the good faith price should have been for each location [and] for each purchase of motor fuel they made from Sun between January 1, 1995 and July 31, 1997. Lost profits, lost related sales or lost going concern value damages are not elements of damages under this claim. As you have seen from the verdict form, you must determine the amount of damages separately for each of the locations involved in the Open Price claims and separate periods for each of the locations.

Id. at *56-57 (emphasis and footnote added). Following trial, the court vacated the verdict and entered judgment in favor of the defendant on the open-price claims because the plaintiffs failed to present sufficient evidence of discrimination, commercial unreasonableness, or what the good-faith price should have been. The court stated:

Here, plaintiffs offered no evidence that [the defendant's] DTW price formula was not followed or was a formula uniquely applied to plaintiffs or did not follow an industry norm. [The defendant's] DTW pricing, as far as the record was concerned, was a `posted price,' `price in effect' and a `market price.' Additionally, the record is silent as to the good faith price plaintiffs say [the defendant] was required to charge.

Id. at *59. This holding was affirmed on appeal. See Schwartz v. Sun Co., Inc. (R M), 276 F.3d 900, 903-05 (6th Cir. 2001) (affirming setting aside of verdict on open-price claims but reversing trial court's setting aside of the verdict on the Robinson-Patman claims). Stephenson contends that, using the Schwartz I jury instruction as a template, its injury is paying a bad-faith price, in comparison to the good-faith price contractually available to a Favored Distributor at the same terminal. Citgo argues that, even applying the Schwartz I jury instruction as a template for Stephenson's § 2-305(2) injury, the comparator good-faith price must be one that was actually paid by a Favored Distributor in order for Stephenson to have suffered a concrete and actual injury.

The Court concludes that Stephenson has not met its burden of showing that it suffered any concrete, non-speculative injury flowing from bad-faith pricing prohibited by § 2-305(2). With respect to price discrimination prohibited by § 2-305(2), cases uniformly refer to prices that are actually charged to the allegedly favored purchaser and not prices that are merely available to the allegedly favored purchaser. See Wayman v. Amoco Oil Co., 923 F. Supp. 2d 1322, 1347 (D. Kan. 1996) (explaining that § 2-305(2)'s chief concern is to prevent "suppliers from charging two buyers with identical pricing provisions in their respective contracts different prices for arbitrary or discriminatory reasons") (emphasis added); Shell Oil Co. v. HRN, Inc., 144 S.W.3d 429, 434 (Tex. 2004) (same) (quoting Wayman); Autry Pet. Co. v. BP Prod. N. Am., Inc., 334 Fed. Appx. 982, 986 (11th Cir. June 26, 2009) (same) (quoting Wayman); Marcus Dairy, Inc. v. Rollin Dairy Corp., No. 05-CV-589, 2008 WL 4425954, at *8 (D. Conn. Sept. 24, 2008) (same) (quoting Wayman) (price-discrimination allegations were that the price setter charged a competitor 25 or 26 cents less per gallon than it charged the claimant); see also Havird Oil Co., Inc. v. Marathon Oil Co., Inc., 149 F.3d 283, 290 (4th Cir. 1990) (affirming district court's grant of summary judgment because, inter alia, the summary judgment evidence showed that the defendant " charged all its customers . . . the same posted rack price") (emphasis added); Casserlie v. Shell Oil Co., 902 N.E.2d 1, 6 (Ohio 2009) (explaining that "[a] discriminatory price could not be considered a `posted' or `market' price, because, in effect, the seller is not being `honest in fact' about the price that it is charging as a posted price, since it is charging a different price to other buyers") (emphasis added); Bob's Shell, Inc. v. O'Connell Oil Assocs., Inc., No. A.03-30169, 2005 WL 2365324, at *6 (D. Mass. Aug. 31, 2005) (denying summary judgment on § 2-305(2) price-discrimination claim where record showed that "[the defendant] charged [the plaintiffs] substantially higher prices than it charged independent dealers") (emphasis added); ISP Mineral Prods., Inc. v. GS Roofing Prods. Co., No. CIV.A.3:97-CV-2326R, 1999 WL 102818, at *3 (N.D. Tex. Feb. 22, 1999) (denying motion to dismiss where counter-claimant alleged that "while it was paying the published list price, [the plaintiff] was offering substantial discounts from that price to its other customers" and further alleged that "[the plaintiff] . . . sold identical roofing granules to other purchasers at a substantial discount from its published list price"). Based on the above law, this Court held in its Order on the Motion to Dismiss that "[i]n the context of § 2-305(2), discriminatory pricing means ` charging two buyers with identical pricing provisions in their respective contracts different prices for arbitrary or discriminatory reasons.'" (12(b)(6) Order 13) (emphasis added) (quoting Wayman). Thus, the typical injury in a § 2-305(2) price-discrimination case occurs by virtue of actual price discrimination — two similarly situated buyers paying different prices.

In one case cited by the Court in its Order on the Motion to Dismiss, the court used the word "provided," which is ambiguous as to whether the plaintiff alleged actual purchases by a competitor at the favored price. See Dixie Gas Food, Inc. v. Shell Oil Co., No. 03-C-8210, 2005 WL 1273273, at *5 (N.D. Ill. May 25, 2005) (allegations that the defendant "unjustifiably provided preferred tank wagon pricing to company-owned and/or other preferred dealers" were "sufficient to state a claim that [the defendant] did not set an open price term . . . in good faith") (emphasis added).

"Paid" may be a more precise term than "charged" in the context of oil and gas pricing. This is because the price charged at the terminal may not be the price ultimately paid for the gas, after application of various discounts. See, e.g., infra Part III.B.2.

But this injury has not occurred here. The only injury Stephenson has suffered is being the victim of potential or hypothetical price discrimination. Stephenson cannot be said to have suffered a concrete, actual injury by paying the alleged bad-faith price, in the absence of a Favored Distributor paying the alleged good-faith price. Stephenson paid the rack price, and, evidently, so did every Favored Distributor purchasing at the Tulsa terminal during the class period. Thus, the rack price (which is Stephenson's contractually agreed price) ceases to be a bad-faith price, and Stephenson has suffered no actual injury. Stephenson could potentially suffer an actual injury if a Favored Distributor qualifies for and takes advantage of a contractually available formula price at a terminal from which Stephenson lifts gasoline. But this has not occurred and may never occur, rendering Stephenson's theory of injury hypothetical and overly speculative. For similar reasons, a contractually available price that was never actually utilized by a Favored Distributor is an overly speculative figure to present to a jury as the good-faith comparator price, under the Schwartz I instruction proposed by Stephenson. See Schwartz I, 1999 U.S. Dist. LEXIS 22257, at *56-57 (instructing jury that "[i]f you find Sun did not set its prices in good faith, plaintiffs may recover as damages the difference between the price . . . they paid for motor fuel and the good faith price, as defined in these instructions, they would have paid"). Due to the speculative nature of the injury,

Indeed, the class period is from July 1, 2004 to the present, and Stephenson has been unable to identify any Favored Distributor who paid the formula price at the relevant terminals.

there is no discernable method of choosing the good-faith comparator price for each terminal at any given time. In the case of Stephenson, should it be 4-Front's alleged contractually available price, Truman's alleged contractually available price, the lowest available formula price between the two, or should it somehow vary depending on the month (as indicated by Mukamel's proposed calculations in Plaintiff's Exhibits 93 and 108)? If it varies by month between Favored Distributors, what is the meaningful basis for such variance? These problems demonstrate the inherent speculativeness of the availability theory of injury. Stephenson has not met its burden of showing that it suffered a concrete flowing from § 2-305(2)'s prohibition on price discrimination in setting open price terms.

With respect to the commercial unreasonableness theory of § 2-305(2), the same analysis applies. Unlike some other theories of commercially unreasonable pricing that may lend themselves to a competitive injury divorced from any good-faith comparator price, Stephenson's theory of commercial unreasonableness is directly tied to price discrimination vis a vis the Favored Distributors. ( See Am. Compl. ¶ 21 ("The standard commercial practice in the gasoline industry was, and continues to be, that generally the sellers offer the wholesale price to distributors at each terminal on a nondiscriminatory basis, i.e., each distributor purchasing the same gasoline product on the same date at the same terminal would be charged the same price."); see also Smith Decl. ¶¶ 19-25, Ex. A to Pl.'s Resp. to Mot. to Strike Smith Decl. (setting forth the industry standard, Citgo's alleged discriminatory pricing scheme, and concluding that "Citgo's pricing scheme was and is contrary to reasonable commercial standards of fair dealing in the industry because the scheme resulted in substantial overpayments by the majority of Citgo distributors compared to the payments made by those distributors who received the special pricing terms for gasoline purchased at the same terminal.") (emphasis added).) Thus, even were the Court to allow Smith to change his testimony to encompass the availability theory of injury, the injury flowing from a violation of industry standards is still speculative for the reasons explained above with respect to price discrimination. Stephenson has therefore also failed to meet its burden of showing that it has suffered a concrete injury flowing from § 2-305(2)'s prohibition on commercially unreasonable pricing.

In addition to Schwartz I, Stephenson relied upon cases utilizing the "equal-footing" doctrine to confer standing upon a plaintiff. See, e.g., Schutz v. Throne, 415 F.3d 1128, 1133-34 (10th Cir. 2005). Stephenson urges the Court to extend the equal-footing standing doctrine to the facts presented, arguing that "Citgo's failure to provide the equal-opportunity Marketer Price promised in the Citgo Contract deprived the Disfavored Distributors of the opportunity to compete on equal footing with the Favored Distributors. This is sufficient to satisfy the Article III standing requirement." (Pl.'s Resp. to Def.'s Mot. to Strike Testimony of Pl.'s Proposed Expert Regarding Injury 3 n. 1.) Citgo contends that this argument was made in "apparent desperation" and has no application to the facts presented. (Def.'s Reply in Support of Mot. to Strike Testimony of Pl.'s Proposed Expert Regarding Injury 9.)

The equal-footing doctrine is limited, at least in Supreme Court and Tenth Circuit law, to equal-protection challenges to legislation. See Ne. Fla. Chapter of Assoc'd Gen. Contractors of Am. v. City of Jacksonville, Fla., 508 U.S. 656, 666 (1993) ("When the government erects a barrier that makes it more difficult for members of one group to obtain a benefit than it is for members of another group, a member of the former group seeking to challenge the barrier need not allege that he would have obtained the benefit but for the barrier in order to establish standing. The `injury in fact' in an equal protection case of this variety is the denial of equal treatment resulting from the

imposition of the barrier, not the ultimate inability to obtain the benefit.") (emphasis added); Schutz, 415 F.3d at 1133 (same). Here, the government has not erected any barrier, there is no equal-protection claim, and the Court finds no legal basis to extend this line of decisions to the facts presented.

In sum, even assuming Citgo entered secret, discriminatory, commercially unreasonable contracts with Favored Distributors and that Stephenson succeeds on the merits of its § 2-305(2)-based breach of contract claim, Stephenson has not shown a sufficiently concrete injury simply by virtue of the existence of such discriminatory contracts. Instead, Stephenson's alleged injury is speculative, illusory, and requires assumption upon assumption. Cf. Stewart v. Kempthorne, 554 F.3d 1245, 1254 (10th Cir. 2009) (finding counties suffered no direct injury and lacked standing to challenge Bureau of Land Management's issuance of certain grazing permits because counties' theory of injury required the court to make several assumptions, including that the issuance of the permits would decrease tax revenues, that there would be a decrease in grazing, and that the decrease in grazing would negatively impact the aesthetic appeal of the counties) ("We cannot make such assumptions, and therefore, the injury argument at this stage is merely conjectural or hypothetical"); Birdsong v. Apple, Inc., 590 F.3d 955, 961 (9th Cir. 2009) (plaintiffs failed to allege injury in fact because, inter alia, the theory of injury asserted — "that some iPods have the `capability' of producing unsafe levels of sound and that consumers `may' listen to their iPods at unsafe levels combined with an `ability' to listen for long periods of time" — was too "conjectural and hypothetical"); Day v. Bond, 500 F.3d 1127, 1133 (10th Cir. 2007) (finding that plaintiffs' second and third theories of injury under an equal-protection claim were not sufficiently concrete and non-speculative to support standing); Bell v. Am. Traffic Solutions, Inc., No. 09-10722, 2010 WL 1141639, at *2 (5th Cir. Mar. 23, 2010) (holding that motorists did not have standing to bring negligence claim against contractor because, inter alia, one asserted theory of injury was "illusory"); Vaughn v. Consumer Home Mortg. Co., Inc., No. 01-CV-7937, 2006 WL 2239324, at *7 (E.D.N.Y. August 4, 2006) (holding that plaintiffs lacked standing because their theory of injury — that they would suffer an intolerably high risk of being deceived again when they re-entered the housing market — was too speculative and remote). These cases are all factually distinguishable, but they demonstrate that an overly speculative theory of injury can warrant dismissal for lack of standing.

Stephenson contends that, if the Court finds no injury in fact under its availability theory, it is impermissibly reaching the merits. However, the "merits" are whether Citgo violated the law by engaging in discriminatory or commercially unreasonable pricing, and the Court's standing analysis does not turn on a failure of proof as to any element of this claim. Instead, the Court holds that, assuming Stephenson can prove such claim and succeed at trial, Stephenson cannot show that it suffered a sufficiently concrete and non-speculative injury resulting therefrom. See Day, 500 F.3d at 1137-38 (explaining that, although court must assume plaintiff will "prevail on his merits argument — that is, that the defendant has violated the law," "there is still work to be done by the standing requirement, and Supreme Court precedent bars us from assuming jurisdiction based upon a hypothetical legal injury").

2. Were Good-Faith Prices Available to Favored Distributors at the Tulsa Terminal?

Alternatively, Citgo argues that Stephenson has not shown Article III standing because, even assuming that contractual availability of a good-faith price to a Favored Distributor results in a concrete injury to Stephenson, Stephenson has failed to satisfy its burden of showing that the good-faith price was ever contractually available to any Favored Distributor at the Tulsa terminal during the class period. Stephenson contends, in contrast, that Favored Distributors 4-Front and Truman "were each party to a formula addendum that entitled them to a formula price" and that "[b]oth of

these formula addenda were applicable to the Tulsa Terminal where Stephenson purchased at rack price." (Pl.'s Resp. to Def.'s Mot. to Strike Testimony of Pl.'s Proposed Expert Regarding Injury 5.) In order to survive this factual challenge to standing, Stephenson must establish a triable question of fact as to whether: (1) 4-Front had a formula price available to it during the class period, or (2) Truman had a formula price available to it during the class period. For reasons explained below, Stephenson has failed to do so, and the factual availability question issue may be resolved as a matter of law.

a. 4-Front

On August 16, 2001, Citgo and 4-Front entered into an Addendum to Distributor Franchise Agreement ("4-Front Addendum"). The 4-Front Addendum provides:

The purchase price for gasoline shall equal Citgo's posted net rack price for applicable grade of gasoline at the applicable terminal as of the date of lifting less a discount of [$x.xx] per gallon (the "Discount"). . . .

. . . [T]he Discount is only earned by [4-Front] if [4-Front] ratably lifts between ninety percent (90%) and one hundred ten percent (110%) of its contract volume under the [Distributor Franchise Agreement] during the applicable month. [4-Front] shall pay CITGO's posted rack prices in accordance with CITGO's standard payment terms. After the end of each month CITGO shall credit [4-Front] the amount of the Discount that [4-Front] has earned during the previous month.

(Ex. 37 to Pl.'s Reply in Support of Mot. for Class Certification, at ¶¶ 2, 2.2, 3.) It is not disputed that the Tulsa terminal was an "applicable terminal" under the 4-Front Addendum. It is also not disputed that the 4-Front Addendum remained in effect at least through June 22, 2006, during a portion of the class period. ( See Ex. 42 to Pl.'s Reply in Support of Mot. for Class Certification, CITGO email dated June 22, 2006, indicating that 4-Front continues to be identified as a formula marketer). The Discount, as it is defined in the 4-Front Addendum, was contractually "available" if 4-Front "ratably lift[ed] between ninety percent (90%) and one hundred ten percent (110%) of its contract volume under the [Distributor Franchise Agreement] during the applicable month." (Ex. 37 to Pl.'s Reply in Support of Mot. for Class Certification, at ¶ 2.2) Thus, Stephenson has presented evidence that 4-Front had a contract in place during some portion of the class period that allowed 4-Front to: (1) purchase gasoline at the "Citgo posted net rack price," and (2) if 4-Front satisfied certain contingencies during the relevant month, receive a credit making its purchase price equal to x.xxx less the "Citgo posted net rack price."

The "Citgo posted net rack price" is defined in the 4-Front Addendum as the "Citgo posted rack price minus any applicable payment discount (typically 1%)." ( Id. at ¶ 2.1.)

As an initial matter, the Court finds that, in order for the formula price to be "contractually available" to a Favored Distributor, the Favored Distributor must have satisfied the relevant contractual conditions precedent to its receipt of the formula price. Fatal to its standing, Stephenson has not shown or created a triable question of fact as to whether, for any months during the class period, 4-Front satisfied the contractual prerequisites and therefore had the formula price contractually "available" for any potential purchases at the Tulsa terminal. It is not disputed that, in February 2004, prior to the beginning of the class period, 4-Front was forced into bankruptcy. An internal CITGO document entitled "Annual Opener Review (3-1-04)" provides:

On 2-24-04, immediately following our review period (Feb. 2003-Jan. 2004), CITGO and other debtors forced 4-Front into bankruptcy. 4-Front's parent company (Hale Hassell) and one of its other subsidiaries, Git-n-Go, has previously filed bankruptcy. Since that time, any formula settlements for 4-Front have been set aside awaiting rulings from the Bankruptcy court. We are currently working with CITGO's legal department and outside council to determine the best approach to cancel or amend the existing price addendum due to the bankruptcy as well as the following non-compliance issues: (1.) Extream [sic] poor ratability[;] (2.) Poor projected economics for CITGO based on increased costs (PDC, capital, mktg exp) as well as the current [xxx] cpg discount[;] (3.) 8 IVP failures YTD as of 4-2004, due to several store closings as a result of the Git-n-Go bankruptcy[;] [and] (4.) Decreased volumes from a high of 58 mmgpy to a 2004 projected volume of 39 mmgpy (Q1, 2004 annualized) due to numerous Git-n-Go store closings[.]

( See Ex. 39 to Pl.'s Reply in Support of Mot. for Class Certification, at CITGO0182428.) It is also not disputed that 4-Front, while in bankruptcy, made only one purchase of 989 gallons of gasoline on July 1, 2004, paid the rack price for such purchase, and did not receive a formula credit for such purchase. ( See Citgo's Notice of Submission of Selected Exhibits Pursuant to this Court's July 15, 2010 Order, Doc. 247 at ¶¶ 1-23 (explaining and attaching relevant portions of Citgo's Class Cert. Hr'g Exs. 66C, 66D and demonstrating that Citgo made this single purchase at the rack price and did not receive a formula credit). Therefore, Stephenson has not shown that, or presented any disputed factual questions as to whether, this single purchase by 4-Front on the first day of the class period was sufficient to satisfy the conditions precedent to receipt of the formula price. As argued by Citgo at the hearing, if the formula price were "contractually available" to 4-Front, it would have received the formula rebate for the single purchase it did make. It did not. This indicates that the formula price was not contractually available for any other hypothetical purchases that could have been made by 4-Front during the class period. Indeed, it is not disputed that 4-Front was in bankruptcy, made only a single purchase at the Tulsa terminal during the class period, and therefore did not qualify for the formula rebate at any time during the class period.

The Court allowed Stephenson to respond to Citgo's Notice of Submission of Selected Exhibits Pursuant to this Court's July 15, 2010 Order. ( See Doc. 251.) Rather than dispute the facts set forth in Citgo's filing, Stephenson requests that the Court modify the class period to have a beginning date of July 1, 2003. Although a court likely has discretion to modify a class period, as argued by Stephenson, the Court declines to do so here based on the untimeliness of the request. All relevant proceedings have been conducted with a proposed class period of July 1, 2004, including discovery and the Court's evidentiary hearing on class certification. It has been six months since the Court conducted such hearing, and Stephenson made no requests to modify the class period during that time. It is simply too late to alter the class period because this alteration will result in the need for significant extensions of time and additional discovery, which the Court is unwilling to grant. This last-minute effort to remedy Stephenson's standing problem is rejected.

b. Truman

On May 1, 2001, Truman entered into an Addendum to Distributor Franchise Agreement ("Truman Addendum"). ( See Ex. 43 to Pl.'s Reply in Support of Mot. for Class Certification.) The Truman Addendum was terminated by Citgo on September 30, 2006, ( see Citgo Class Cert. Hr'g Ex. 68FFFFFFFFF at CITGO 382580, attached as Exhibit D to Doc. 247), and was therefore in existence for the first fifteen months of the class period. The Truman Addendum is significantly more complicated than the 4-Front Addendum. It provides:

3. Gasoline is to be priced in accordance with subparagraphs 3.1, 3.2, and 3.3 and paragraph 4 below.

3.1 Gasoline that is sold for delivery to Truman Arnold stations that are currently branded with CITGO and that have not completed their branding commitment that is set forth in Schedule A (the "Committed Stations") shall be priced at CITGO's normal rack price. A list of the Committed Stations with their respective branding commitment date is attached as Schedule A. The Committed Stations shall be entitled to continue to receive such CITGO marketing program benefits for which they are currently enrolled.

3.2 Gasoline that is lifted from the Southlake, Fort Worth, Arlington, Austin, Bryan/Hearne, Houston, Mt. Pleasant, Tulsa, Tyler, Waco, Oklahoma City, Caddo Mills, Memphis and West Memphis Terminals (the "Formula Terminals") and that is sold for delivery to the Formula Stations, including Committed Stations after completion of their applicable Schedule A commitment period, shall be priced under the formula pricing provisions set forth in paragraph 4 and such Stations shall not be entitled to receive any CITGO marketing program, co-op advertising or brand enhancement benefits except for certain branding expenses which are discussed in paragraph 6.

3.3 Gasoline delivered to Truman Arnold's existing CITGO branded stations that are not subject to the branding commitment set forth in Schedule A or that has satisfied their branding commitment set forth in Schedule A shall be priced under the formula pricing provisions of paragraph 4; provided that the gasoline is lifted from the terminal that currently supplies the station, and such stations shall not be entitled to receive any CITGO marketing program, co-op advertising or brand enhancement benefits except for certain branding expenses which are discussed in paragraph 6.

. . .

CITGO and Truman Arnold may agree, from time to time, to modify the list of terminals that are considered Formula Terminals.

4. The purchase price for the gasoline that is delivered to a Formula Station and that is either lifted from either (i) a Formula Terminal, as described in subparagraph 3.2 or (ii) an existing terminal as described in subparagraph 3.3 shall equal a weighted average of the two lowest OPIS net rack prices for the applicable terminal and the applicable grade of gasoline as of the date of lifting, plus [$x.xxx] per gallon, plus applicable taxes, if any. In determining a weighted average, the second lowest OPIS net rack price shall be given twice the weight of the lowest OPIS net rack price. Specifically to determine the weighed average, the lowest OPIS net rack price will be added to twice the second lowest OPIS net rack price and the sum will be divided by three. . . . Should the purchase price as determined herein exceed the posted CITGO's net rack price at the applicable terminal for more than three (3) days, it is agreed that the posted CITGO net rack price will be used as the purchase price during such period.

. . .

4.2 For purposes of this Addendum, the "net rack price" shall mean the posted rack price minus any applicable payment discount (typically 1%). There are no additional payment discounts on this formula price.

. . .

5. Truman Arnold shall pay CITGO's normal rack prices in accordance with CITGO's standard payment terms. Each month CITGO will compute Truman Arnold's total actual liftings for each terminal (the "Monthly Terminal Volume"). The Monthly Terminal Volume for each terminal will be prorated between Formula Stations and non-Formula Stations that are supplied from the particular terminal. The proration will be based on the CITGO Brand Master Volume between the Formula Stations and the non-Formula Stations that are supplied from the particular terminal. The formula price described in paragraph 4 above will apply to the lesser of (i) the prorated volume attributed to the Formula Stations or (ii) the CITGO Brand Master Volume of the Formula Stations. This computation shall be made for each applicable terminal. Within ten (10) business days of the following month, CITGO shall prepare a reconciliation between the formula price calculated under paragraphs 4 and 5 of this Addendum and the amount actually paid by Truman Arnold. CITGO shall credit or debit Truman Arnold the amount that is due as a result of the reconciliation. Either party may conduct a review or audit of the other party's records for the purpose of determining compliance with the provisions of the Addendum. Such review or audit shall occur during normal business hours and within eighteen (18) months of the month(s) that are being reviewed or audited.

( See Ex. 43 to Pl.'s Reply in Support of Mot. for Class Certification at ¶¶ 3-5 (emphasis added).) Thus, in order for Truman to ultimately receive the formula credit for a lifting at a particular terminal, Truman must: (1) purchase the gas from a "Formula Terminal;" (2) purchase the gas for delivery to a "Formula Station;" and (3) that "Formula Station," if it is a "Committed Station," must have completed its "branding commitment."

Applying the Truman Addendum to the Tulsa terminal during the fifteen months such addendum was in existence during the class period, Stephenson has failed to show that the formula price was contractually available to Truman. The Tulsa terminal is a Formula Terminal. However, the two stations relevant to the Tulsa terminal, identified in Schedule A as Location #41628036 and Location # 41628070 ("Tulsa Stations"), were "Committed Stations." ( See id. at Schedule A at CITGO 0382593.) This means that the formula price was only available to Truman if and when those stations "completed their branding commitment." ( See id. at ¶ 3.1.) However, Stephenson conceded in its brief that this condition was not satisfied during the class period. ( See Pl.'s Resp. to Def.'s Mot. to Strike Testimony of Pl.'s Proposed Expert Regarding Injury 6.) Stephenson argued instead that "[w]hile this fact [non-expiration of the branding commitments] may have limited [Truman's] use of the existing formula at Tulsa, under the terms of the addendum the formula price was available to [Truman] for any other purchases it chose to make." This argument fails because such "other purchases" are illusory. As argued by Citgo, availability of the formula price for any "other purchases" could only have occurred if Truman acquired a new station around the Tulsa terminal that was not subject to a branding agreement, or if it purchased gas at the Tulsa terminal and transported it to stations closer to another terminal. Stephenson has made no showing that either event was remotely likely to occur. This argument by Stephenson requires speculation and cannot be used to establish injury.

The expiration dates of the branding commitments for the Tulsa Stations appear to be before cancellation of the Truman Addendum in September 2006. ( See Ex. 43 to Pl.'s Reply in Support of Mot. for Class Certification at Schedule A.) However, Stephenson did not make this argument. Instead, Stephenson conceded the fact of non-expiration by arguing that "this fact [non-expiration of branding agreements] may have limited" Truman's use of the formula price at the Tulsa terminal. ( See Pl.'s Resp. to Def.'s Mot. to Strike Testimony of Pl.'s Proposed Expert Regarding Injury 6 (emphasis added).) Stephenson bears the burden of proving standing. Stephenson has had ample opportunity and incentive to analyze, explain, and present evidence regarding contractual availability of the formula price under the Truman Addendum, and Stephenson failed to satisfy its burden.

Instead of making arguments related to the Truman Addendum itself, Stephenson attempts to shift the Court's focus to internal Citgo documents that calculated a formula price for Truman for a one-month period during January of 2006. ( See Ex. 44 to Pl.'s Reply in Support of Mot. for Class Certification.) Accepting as true that this document reflects such a calculation, it still does not prove contractual availability to Truman. Stephenson's burden, for purposes of proving that it has standing to seek recovery based on its availability theory of injury, is to show that the formula price was contractually available to at least one Favored Distributor for that Favored Distributor's purchases at the Tulsa terminal. Stephenson has failed to demonstrate that the contractual conditions entitling Truman to the formula price at the Tulsa terminal were indeed satisfied during the relevant time period of July 1, 2004 to September 30, 2006. Nor has Stephenson presented any evidence that creates a disputed question of fact regarding contractual availability to Truman or 4-Front that requires resolution by a jury.

IV. Conclusion

Unfortunately for Stephenson, the evidence it acquired from Citgo during discovery did not support its original theory of injury — paying a discriminatory price in comparison to the price paid by a Favored Distributor at the same terminal. Its attempt to remedy this standing problem by shifting to a straight breach theory fails because such theory was untimely asserted. Its attempt to remedy this standing problem by shifting its § 2-305(2) theory of injury to mere availability of a

formula price to a Favored Distributor fails because (1) the availability theory of injury is not a concrete, actual injury for purposes of Article III; and (2) even assuming the availability theory of injury satisfies Article III's requirements, Stephenson has failed to create any triable question as to whether it suffered such an injury by virtue of contractual availability of the formula price to a Favored Distributor at the Tulsa terminal. Therefore, Stephenson lacks standing to assert this § 2305(2)-based breach of contract claim.

Where the only named plaintiff in a putative class action lacks standing from the outset of the case, and a class has yet to be certified, the proper course is dismissal. See Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir. 2003) (named plaintiff lacked standing) ("[B]ecause this is not a mootness case, in which substitution or intervention might have been possible, we remand this case to the district court with instructions to dismiss."); 1 Herbert B. Newberg on Class Actions § 2:7 (4th ed. 2002) ("If the plaintiff has no standing individually, then no case or controversy arises. . . ."). The Court's dismissal for lack of standing must be without prejudice. Brereton v. Bountiful City Corp., 434 F.3d 1213, 1216 (10th Cir. 2006) ("Since standing is a jurisdictional mandate, a dismissal with prejudice for lack of standing is inappropriate, and should be corrected to a dismissal without prejudice."). Stephenson's counsel has been aware of Stephenson's standing problems at least since Citgo filed its opposition to the Motion for Certification. In addition, the Court expressed its concerns with standing at the class-certification hearing over six months ago, and Stephenson has not moved the Court for leave to add another plaintiff. Accordingly, the Court finds no reason to allow Stephenson additional time to name another plaintiff. See Hammond v. Reynolds Metals Co., 219 Fed. Appx. 910, 915 (11th Cir. 2007) (finding that district court did not abuse its discretion when it dismissed putative class action for lack of standing without providing opportunity to amend complaint to add plaintiffs with standing).

Plaintiff's Motion for Class Certification ("Motion for Certification") (Doc. 152) is DENIED based on Stephenson's lack of standing. Defendant's Motion to Strike Testimony of Plaintiff's Proposed Expert Regarding Injury (Doc. 215) is DENIED, and the Court considered the availability theory and Mukamel's testimony and exhibits in reaching its conclusion regarding standing. Defendant's Motion to Strike Declaration of Alvin Smith (Doc. 199) is DENIED as premature. Defendant's Motion to Make its Class Certification Exhibits Part of the Record (Doc. 217) is DENIED, except as to those portions of class-certification hearing exhibits explained and filed as part of Citgo's Notice of Submission of Selected Exhibits Pursuant to this Court's July 15, 2010 Order (Doc. 247).

Pending motions related to discovery (Docs. 224 and 262) are DENIED as moot.

This redacted Opinion and Order is entered this 14th day of September, 2010. The sealed Opinion and Order (Doc. 265) was entered July 28, 2010.