The Supreme Court of Appeals of West Virginia has affirmed a lower court’s grant of summary judgment in favor of an operator of a chain of gas stations and convenience stores alleged to have sold gasoline below cost in violation of the state’s Unfair Practices Act (UPA), holding that the UPA does not include taxes in the calculation of a retailer’s product cost. Zach Chaffee-McClure, Tristan Duncan, Dan Schwaller and Keith Starr represented Mac’s in the proceeding.
The parties, Alan Enterprizes and Mac's Convenience Stores, operate competing businesses in the state; in 2014, Alan filed suit against Mac’s claiming unfair competition, alleging the retailer was selling gasoline below cost in violation of the UPA. Both parties moved for summary judgment seeking a determination of whether the UPA, W. Va. Code § 47-11A-1 et seq., includes taxes in the calculation of a retailer’s product cost. Section 6(a) of the UPA states that a retailer’s cost “shall mean bona fide cost” to which freight charges and markup are added. In contrast, Section 6(b) states that a wholesaler’s cost is calculated by “bona fide cost . . . plus applicable taxes,” plus applicable freight charges and markup. Accordingly, the circuit court granted summary judgment to Mac’s, finding in its review of the statutory language that the state legislature intended for taxes to be included in the calculation of wholesale cost, but not retail cost. The court said it “appreciate[d] the Plaintiff’s argument that this interpretation thwarts legislative intent by rendering the Act moot in the context of retail gasoline sales due to ‘cost’ being so low; however, this, perhaps unintended, collateral effect should be resolved, if at all, legislatively.” But the court also noted that the act lacked any other structure to determine the exclusion or inclusion of taxes when calculating cost for a particular industry or individual business.
The Supreme Court affirmed, holding that the plain and unambiguous language of the statute meant that taxes were not to be included in calculation of a retailer’s cost. Further, the court pointed to recent statutory amendments to Section 6(a)(2) related to the calculation of markup, which state: “Provided, that such a markup to cover the cost of doing business as provided for in this subdivision shall be exclusive of any federal and state motor fuel taxes.” The language of the amendments, the court said, was further evidence in support of the grant of summary judgment. “There is simply no indication that the Legislature intended to include taxes within the calculation of a retailer’s cost,” the court said. “Rather, the recent amendments to this section suggest quite the contrary: taxes are not included in the calculation of a retailer’s cost.”
The court concluded that it “is not for this Court arbitrarily to read into a statute that which it does not say . . . to the extent that the facts of this case present a unique scenario given that the retailers herein sell gasoline, which is subject to state and federal motor fuel taxes, we concur with the circuit court’s suggestion that such policy decisions are better suited for legislative consideration and decision.”
The case is Alan Enterprizes LLC v. Mac’s Convenience Stores LLC, No. 17-87 (W.Va., opinion issued February 7, 2018).