CHICAGO (CN) — The Seventh Circuit sided with wholesale retailer Costco on Tuesday in a fight over gasoline sales in the Green Bay, Wisconsin, area.
The losers in that fight were a collection of Green Bay gas stations who claimed the retailer had violated the Wisconsin Unfair Sales Act. They argued a local Costco-owned station sold gasoline below state-mandated minimum prices for several years, undercutting the plaintiffs' businesses since they were unable to lower their prices to match Costco without tanking their profits.
The three-judge appellate panel from the Seventh Circuit thought otherwise, ruling Tuesday that the Green Bay stations had not provided enough evidence to show a causal link between Costco's gas pricing scheme and their diminished income.
"The evidence the Green Bay Stations offer is not sufficient to prove causation for purposes of the [Wisconsin Unfair Sales Act]. In the absence of any rigorous market or economic analysis (or even evidence that at least one customer actually elected to purchase gasoline from Costco rather than from the Green Bay Stations because Costco offered lower prices), the testimony upon which the Green Bay Stations rely amounts to little more than sheer speculation," wrote U.S. Circuit Judge Diane Wood, a Bill Clinton appointee who authored the panel's unanimous 28-page decision.
The Green Bay gas stations initially filed a class action against Costco in Wisconsin state court in March 2020. The case was moved to East Wisconsin federal court district that May, and after almost three years of proceedings and several amended claims, U.S. District Judge William Griesbach gave Costco summary judgment in March 2023. The Seventh Circuit's decision on Tuesday affirmed Griesbach's ruling and echoed his reasoning.
"Plaintiffs’ general observations and subjective belief that their declining sales and profits from 2017 to 2020 were attributable to Costco’s 'low gas pricing' are purely speculative and conclusory," Griesbach wrote in his summary judgment ruling. "Plaintiffs have not provided a link between a decline in sales or profits and Costco’s gas prices."
When the case went before the Seventh Circuit for oral argument last February, the appellate judges wondered if the Green Bay stations even had standing to bring their claims. The judges asked about heat maps, what the Merriam-Webster definition of a "direct competitor" is, how many average customers the Green Bay gas stations see, and all to get at the question of whether those stations could show a standing-worth injury.
In Tuesday's opinion, the judges decided they could. Wood cited the 1995 Seventh Circuit case Sanner v. Board of Trade of the City of Chicago to support the panel's determination; in Sanner the court found soybean farmers who were forced to sell their product at lowered prices had standing to sue the Chicago Board of Trade.
The panel acknowledged the gas stations' claims paralleled the soy farmers' in Sanner, with the caveat that showing standing does not prove the plaintiffs' allegations.
"We emphasize that the question at this point of the analysis is not whether the testimony proves that Costco’s pricing practices caused harm to the Green Bay Stations, but only whether it is sufficient to show a substantial likelihood of causation," Wood wrote.
The Green Bay stations lost the appeal for lack of evidence, despite establishing standing, in part because of price-saving deals some of them offered consumers. Several of the local Marathon stations had a "MakeItCount Rewards" program to encourage customer loyalty, and those who signed up for the program paid five cents less per gallon than the advertised sticker price for gas. The Costco station, the appellate panel found, never dipped below those "MakeItCount" prices.
"As the district court noted, the text of the [Wisconsin Unfair Sales Act] does not restrict a retailer to matching the posted price of its competitors. The terms are broad enough to allow for the matching of any price offered to a buyer, whether that price is advertised or not," Wood wrote. "Costco was therefore entitled to match the prices offered through MakeItCount Rewards, notwithstanding the fact that the Marathon Stations did not advertise them."
Wood was joined in her ruling by U.S. Circuit Judges John Lee and Doris Pryor, both Joe Biden appointees.
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