Lawsuit alleging retailers misrepresented the grade of gasoline at the pump is not “completely preempted” by federal law

by John Chapman

After purchasing premium grade gasoline in Missouri from MFA Petroleum, Casey’s General Stores, and Quicktrip Corporation (“the operators”), Joyce Johnson filed a class action lawsuit alleging that the operators misrepresented the grade of gasoline sold at their stations from “single hose blender pumps.” This type of pump dispenses all available grades of gas through a single hose and nozzle after a purchaser pushes a designated button to obtain the grade each prefers. According the lawsuit, when a purchaser of premium gas uses a pump immediately after someone else has purchased a lower grade, the premium customer actually receives up to one half gallon of lower grade gas still remaining in the hose. The lawsuit alleges that selling the lower grade gas at the higher grade price is violation of the Missouri consumer protection law. She filed her lawsuit in a Missouri state court.

The operators removed the case to a federal court, arguing that Johnson’s claim was “completely preempted” by federal law. Specifically, they argued her claims were covered by the federal Petroleum Marketing Practices Act. Subchapter II of the Petroleum Marketing Practices Act regulates octane disclosure requirements, including both the form and content of gas station octane rating displays. Enforcement of the provisions in Subchapter II is given solely to the Federal Trade Commission and the federal law does not provide for a private cause of action by consumers.

The United States Supreme Court has explained that complete preemption exists only where federal preemption is so strong that “there is . . . no such thing as a state-law claim.” In determining whether a state law claim is completely preempted, a court must ask whether Congress intended a federal statute to provide “the exclusive cause of action for the claim asserted and also set forth procedures and remedies governing that cause of action.”. A conclusion that there is complete preemption effectively maintains that the plaintiff has simply brought a mislabeled federal claim. Complete preemption is thus quite rare. The Supreme Court has recognized complete preemption in only three areas: § 301 of the Labor Management Relations Act; § 502(a) of ERISA, Metro. Life Ins. Co. v. Taylor, 481 U.S. 58 (1987); and §§ 85 and 86 of the National Bank Act.

The federal court agreed with the operators and denied Johnson’s request to return the case to state court. Johnson appealed the district court’s decision to the Eight Circuit Court of Appeals. Johnson argued that because Subchapter II of the Petroleum Marketing Practices Act does not even provide her with a federal cause of action, it does not “completely preempt” her state law cause of action. The operators countered that a federal cause of action is not a requirement for complete preemption.

The court of appeals agreed with Johnson. The court noted that it had previously held that removal of a state court lawsuit to federal court under the complete preemption doctrine is proper only in circumstances where “a federal statute completely displaces state law and it is clear Congress meant the federal statute to be the exclusive cause of action for the type of claim asserted.” Thomas v. U.S. Bank Nat’l Ass’n ND, 575 F.3d 794, 797 (8th Cir. 2009). According to the court of appeals, “it is difficult to maintain that a federal statute is meant to be the “exclusive cause of action” for a given claim when it does not create any cause of action at all.” Johnson v. MFA Petroleum, No. 12-1464 (8th Cir. Dec. 3, 2012). The court concluded that “without a federal cause of action which in effect replaces a state law claim, there is an exceptionally strong presumption against complete preemption.” Thus, Johnson’s claim is not completely preempted and there is no federal jurisdiction over her claim.