Kearney v. Equilon Enterprises, LLC
65 F. Supp. 3d 1033 (2014)
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Rule of Law:
An advertisement constitutes a binding offer for a unilateral contract if it is clear, definite, and explicit, promising a specific performance in exchange for a requested action, such that a reasonable person would believe their performance would form a contract.
Facts:
- Shell-brand service stations (Defendant) displayed advertisements for a 'Ski Free' promotion.
- The advertisements stated, 'buy 10 gallons of fuel, get a voucher for a free lift ticket!'.
- Plaintiffs purchased ten or more gallons of fuel from participating Shell stations and requested the voucher.
- Upon purchasing the fuel, Plaintiffs received a voucher with their receipt.
- The voucher was not for a free lift ticket, but was a 'two for one' coupon that required the holder to purchase a full-price lift ticket to receive a second one for free.
- The voucher also contained other material restrictions and conditions that were not disclosed in the initial advertisement.
Procedural Posture:
- Plaintiffs filed a proposed class action lawsuit against Defendant in the United States District Court.
- The complaint alleged a nationwide breach of contract claim and several state-specific unlawful trade practice claims.
- Defendant filed a motion to dismiss all claims for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).
- Defendant argued the advertisement was not a specific enough offer to form a contract and that there was no valid consideration.
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Issue:
Does an advertisement stating 'buy 10 gallons of fuel, get a voucher for a free lift ticket' constitute a clear and definite offer for a unilateral contract that is accepted by the customer's performance of purchasing the fuel?
Opinions:
Majority - Hernández, District Judge
Yes, the advertisement constitutes a sufficiently clear and definite offer for a unilateral contract. While advertisements are generally not considered offers, an exception exists when an advertisement is 'clear, definite, and explicit, and leaves nothing open for negotiation.' Citing the Ninth Circuit's decision in Sateriale, the court reasoned that the ultimate test is whether a reasonable person receiving the communication would believe it was intended as an offer. Here, the advertisement promised a specific performance (a voucher for a free lift ticket) in exchange for a specific action (purchasing ten gallons of fuel). A customer could reasonably conclude that by performing the requested act, a contract would be formed. The customer's performance of buying the fuel serves as both acceptance of the offer and the consideration needed to form a binding unilateral contract.
Analysis:
This decision reinforces the modern application of the unilateral contract doctrine to consumer promotions, following the precedent set in cases like Lefkowitz and Sateriale. It highlights that courts will look beyond the general rule that advertisements are mere invitations to treat and analyze the 'totality of the circumstances' to protect consumers' reasonable expectations. This holding serves as a warning to advertisers that specific, promise-like language in promotional materials can create binding contractual obligations. Future cases involving consumer rewards programs or similar promotions will likely look to this analysis to determine whether an advertisement crossed the line from puffery to a legally enforceable offer.
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