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Inc. v. Airgas USA, LLC

United States District Court, S.D. California

November 21, 2019

AIRGAS USA, LLC, Defendant.



         Currently before the Court is Defendant Airgas USA's Motion to Dismiss. Dkt. 16. For the reasons below, that motion is GRANTED.


         Defendant Airgas USA, LLC (“Airgas”) is a Delaware corporation, headquartered in Pennsylvania, that manufactures and distributes commercial gas cannisters nationwide. First Am. Compl. (“FAC”) at ¶¶ 8-9. For at least the past four years, Airgas has charged its customers, including Plaintiff Lit'l Pepper Gourmet, Inc. (“Lit'l Pepper”), a “Fuel Surcharge, ” which it lists on every invoice and delivery receipt. Id. at ¶¶ 16, 21. Lit'l Pepper filed this complaint on behalf of itself and all other California Airgas customers, alleging that Airgas's decision to impose these fuel surcharges constitutes breach of contract and a violation of various California consumer protection laws. Lit'l Pepper claims that the fuel surcharges bear no relation to Airgas's actual fuel costs and are not used to offset an increase in the cost of fuels. Instead, according to Lit'l Pepper, the fuel surcharges are simply a hidden rate increase designed to generate profit. Airgas now moves to dismiss, arguing that the terms of sale found on its website permit it to impose these fuel surcharges.


         A. Legal Standard

         A Rule 12(b)(6) motion tests the sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). While a plaintiff need not give “detailed factual allegations, ” a plaintiff must plead sufficient facts that, if true, “raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 547). A claim is facially plausible when the factual allegations permit “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The Court need not accept legal conclusions couched as factual allegations. See Twombly, 550 U.S. at 555.

         B. Threshold Issue: Which Set of Terms Controls?

         Before analyzing the sufficiency of Plaintiff's complaint, the Court must first determine which set of contractual terms governs the party's relationship when the terms conflict. The key dispute in this case concerns a provision in the website's terms of sale that allows Airgas to impose a fuel surcharge not only if the company encounters extraordinary or emergency circumstances, but also in the face of “unanticipated increases in the cost of manufacturing, supplying or distributing.” The corresponding provision on the invoices contains no such carve out, but instead permits the company to impose a fuel surcharge only in extraordinary or emergency circumstances. Naturally, Plaintiff claims that the terms on the invoices control, while Airgas maintains that the terms on its website supersede those on the invoices. As relevant here, the language on the invoices provided:

Terms of Sale. Each sale of Goods or services . . . is and shall be governed by the terms and conditions on this Disclosure, the Terms of Sale affixed to the Account Application (if one has been completed), and the Terms of Sale found at (collectively the “Terms of Sale”).
Surcharges. Upon notice and receipt of underlying documentation, Buyer shall pay to Seller a surcharge in the event of any extraordinary or emergency increases in the cost of (a) power and/or raw materials used in the production of Products and/or (b) fuel.

FAC, Ex. A at 9. The language on the delivery orders-which were signed by a Lit'l Pepper representative at the time Lit'l Pepper accepted a delivery from Airgas-contained no information about surcharges but similarly directed customers to Airgas's website for the full terms governing the transaction:

AIRGAS TERMS AND CONDITIONS OF SALE. Each sale of Products by Airgas USA, LLC, or one of its affiliates (“Seller”), shall be governed by the terms and condition below and the terms of sale found at (collectively, the “Terms”). If you do not have access to the internet, you may request a copy of the terms of sale from your Airgas customer service representative.

Id. at 6. Finally, the online terms provide, in relevant part:

TERMS OF SALE. Except as provided in a separate written agreement, such as a Product Sales Agreement, negotiated by the parties and executed by authorized representatives of Seller and Buyer, each sale of Products or Services shall be governed by these Terms and Conditions of Sale (“Terms”). . . . Seller's acceptance of any order is expressly subject to Buyer's assent to each and all of the terms and conditions set forth herein. These Terms represent the entire agreement with respect to the sale or rental of Products and Services and, except as provided in a separate written agreement as set forth above, supersede all prior or contemporaneous written/oral communications between the parties and information in any Seller literature, website or catalog, and override and exclude any other terms and conditions stipulated, incorporated or referred to by Buyer, including without limitation any Buyer purchase order, and any prior course of dealing between the parties.
ITEMIZED CHARGES. The total amount due from Buyer may include various itemized charges, including: charges for the handling of hazardous materials and for compliance with laws and regulations concerning hazardous materials; charges for handling, delivery, and shipping; and/or charges for energy or fuel. None of the charges represents a tax or fee paid to or imposed by any governmental authority and all of the charges are retained by Seller. Seller has not specifically quantified the relationship between the charges and the actual costs ...

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