Exxon Mobil Corp. v. Gill

Summary

The Supreme Court of Texas held that claims by Exxon service station dealers concerning rebates and open-price provisions constituted a single contract claim under Texas Uniform Commercial Code section 2.305. Applying the good-faith safe harbor discussed in Shell Oil Co. v. HRN, Inc., the court concluded that allegations that Exxon secretly recouped rebate costs did not distinguish the case from that precedent because the dealers did not allege commercially unreasonable or discriminatory pricing. The court vacated the class-certification order and remanded for further proceedings.

Holdings

1. The dealers presented a single claim for breach of the open-price provisions based on an alleged failure to act in good faith; they did not assert an independent contract claim based on the rebate promises or a fraud claim.
2. When a seller charges a posted or price-in-effect price under an open-price contract, an allegation of undisclosed or subjective bad faith, without a claim that the price was commercially unreasonable or discriminatory, does not defeat the section 2.305 good-faith safe harbor.
3. The class-certification order could not stand because the trial court and court of appeals misconstrued and misapplied Shell Oil Co. v. HRN, Inc.; the order was vacated and the case remanded for further proceedings.

Questions Presented

1. Whether the dealers’ allegations constituted a single breach-of-contract claim based on the open-price provisions rather than separate claims for breach of rebate promises or fraud.
2. Whether allegations that Exxon secretly recouped rebate costs through its prices could overcome the good-faith safe harbor for posted or price-in-effect provisions under Texas Business and Commerce Code section 2.305.
3. Whether the trial court properly certified a class when the certification order was based on a misunderstanding of the governing section 2.305 and class-certification law.

Disposition

vacated