CHAVEZ, J.
Plaintiffs and appellants R.N.R. Oils, Inc., et al. (plaintiffs), appeal from the judgment entered in favor of defendants and respondents BP West Coast Products LLC (BPWCP) and Atlantic Richfield Company (ARCO)
We affirm the judgment.
BPWCP is the franchisor of ARCO branded gas stations and am/pm convenience stores in the western United States. Plaintiffs are 16 individuals or business entities who are BPWCP franchisees.
BPWCP franchisees enter into a number of agreements governing their franchise operations (collectively, the Contract Documents). Included among the Contract Documents are the following agreements relevant to this appeal:
PMPA Franchise Agreement (PMPA Agreement). This agreement governs gasoline sales. It provides in relevant part: "BPWCP agrees to sell to Franchisee and deliver to the Premises such quantities of ARCO Branded Motor Fuels as are ordered by Franchisee or, at BPWCP's sole discretion, in accordance with BPWCP's automatic gasoline delivery system. Franchisee agrees to accept and pay for such Branded Motor Fuels as are delivered to the Premises." The PMPA Agreement further provides: "BPWCP reserves the right to provide ARCO branded motor fuels solely through an automatic gasoline ordering and delivery system and to not accept individual orders placed by franchisee."
am/pm Mini Market Agreement (Store Agreement). This agreement governs convenience store operations. Among other things, the Store Agreement requires a franchisee to pay to BPWCP a royalty fee equal to a percentage of monthly gross sales. Paragraph 7.02(b) of the Store Agreement defines gross sales for the purpose of calculating the royalty fee.
PayPoint Addendum. Under the terms of this agreement, BPWCP agrees to provide to its franchisees a PayPoint Network Service, enabling a franchisee's customers to use a debit card in lieu of cash for purchase transactions. The PayPoint system and equipment are considered part of the required store equipment to be installed and maintained by a franchisee. Franchisees who lease their business premises also lease the PayPoint equipment and have the lease payments for the PayPoint Network equipment included in their rent payments. Franchisees who own their locations purchase the PayPoint Network equipment and pay a monthly transaction fee for telecommunications charges incurred through use of the equipment.
BPWCP generally does not accept credit card payments at ARCO stations and am/pm stores. As an alternative to credit card transactions, BPWCP does allow debit transactions, which enable customers to buy gasoline or other items by using a debit card linked to the customer's bank account. Customers who make purchases using a debit card are charged a convenience fee of $0.45 per debit card transaction. A portion of the convenience fee is paid to third parties, other than BPWCP, who are involved in processing the debit card transactions.
To process debit card transactions at ARCO and am/pm locations in the western United States, BPWCP contracts with PayPoint Electronic Systems, Inc. (PayPoint). PayPoint provides access to participating interbank networks and banks and manages the flow of electronic fund transfers. When a customer uses a debit card to make a purchase, PayPoint transmits the request from the franchisee's point of sale terminal to an interbank network, which then routes it to the customer's bank. The customer's bank account is debited in an amount equal to the purchase price plus the $0.45 convenience fee, and from that amount the bank and the interbank network deduct their own transaction fees. The remainder is remitted to an account maintained by PayPoint. PayPoint then aggregates the transactions from all ARCO station locations and all interbank networks and credits the aggregate amount to an account held by BPWCP. From the BPWCP account, PayPoint "settles" with franchisees on a daily basis by crediting to their respective accounts sales from the previous day. PayPoint "reconciles" with BPWCP on a monthly basis by deducting its own fees and charges from the BPWCP account. BPWCP retains the remainder.
As specified in the Contract Documents, BPWCP uses an automated gasoline delivery system (AIMS) to deliver gasoline to ARCO stations. AIMS receives information about a station's gasoline inventory and uses projected sales models to schedule deliveries and to forecast deliveries. On average, AIMS attempts to maintain fuel levels at 30 percent to 60 percent of tank volumes and a three- to six-day supply for midgrade and premium gasoline.
In their operative third amended complaint, plaintiffs alleged five causes of action. The first two causes of action — for alleged violations of Business and Professions Code sections 21200 and 17000 — concerned one plaintiff only, and were subsequently dismissed.
In the third cause of action, plaintiffs alleged that defendants violated the UCL by engaging in various unfair business practices, including (1) implementing the AIMS automated gasoline delivery system in a manner that (a) forced plaintiffs to accept unnecessary fuel deliveries when fuel prices were decreasing and to experience fuel shortages when fuel prices were increasing, and (b) caused plaintiffs to bear the cost of fuel price changes while scheduled fuel deliveries were pending; (2) keeping vendor rebates and promotional allowances that belonged to the franchisees; and (3) delaying payment of refunds and reimbursements owed to plaintiffs for erroneous gasoline charges.
In the fourth case of action, plaintiffs alleged that they, and not BPWCP, were entitled to the fees generated by PayPoint debit card transactions, and that BPWCP's retention of those fees was an unfair business practice that violated the UCL. In their fifth cause of action, plaintiffs alleged that defendants violated Corporations Code section 31101 by modifying the terms of the parties' franchise agreements without adequate written notice.
Defendants filed a motion for summary adjudication of the third and fifth causes of action,
In their motion for summary adjudication of the fourth cause of action, plaintiffs argued that as franchisees, they are entitled to all profits derived from the real property, improvements, and equipment at their respective premises unless voluntarily surrendered, including the fees generated from PayPoint debit card transactions. In support of the motion, plaintiffs offered their own declarations attesting to their understanding of the Contract Documents, and their rights and obligations thereunder. Plantiffs in their declarations stated that the $0.45 PayPoint convenience fee charged to debit card customers was part of the "gross sales" plaintiffs were entitled to receive under the Contract Documents and that they never surrendered the right to receive those fees.
Defendants' cross-motion for summary adjudication of this claim was also based on the Contract Documents, which they argued contained no provision that gave plaintiffs any right to the PayPoint fees. Defendants further argued that plaintiffs' UCL claim failed as a matter of law because plaintiffs failed to establish that BPWCP's retention of the PayPoint fees is an "unfair" business practice under any of the applicable standards set forth in California law.
In their motion for summary adjudication of the third cause of action, defendants argued that the Contract Documents gave BPWCP the express right to use an automated gasoline delivery system and that there was no evidence that deliveries were manipulated based on fuel prices. In support of the motion, defendants offered the declaration of Nancy Sheets, the manager responsible for scheduling fuel deliveries in five western states. In her declaration, Ms. Sheets described scheduling gasoline deliveries across a broad network of stations as a formidable task that must account for factors such as the availability of delivery trucks, as well as the time it takes to load and transport gasoline products. She stated that allowing franchisees to dictate their own delivery schedules makes fuel deliveries difficult to coordinate. Ms. Sheets explained that the AIMS system operates by receiving information about a station's gasoline inventory and using projected sales and models to determine when to schedule a delivery. She also stated that BPWCP's scheduling team is not privy to changes in fuel prices and does not know or consider prices when scheduling deliveries.
Defendants argued that plaintiffs' claim regarding delayed reimbursements for erroneous gasoline charges was not cognizable under the UCL because monetary relief available under the UCL is limited to restitution and plaintiffs had already been reimbursed for such charges.
Defendants further argued that the plaintiffs' promotional allowances claim was without merit because the Contract Documents contained an express assignment by plaintiffs to BPWCP of the right to receive promotional allowances and vendor rebates.
In opposing defendants' motion, plaintiffs offered their own declarations in which they attested to fuel shortages during periods of fuel price increases and to excessive fuel deliveries during periods of price decreases. One plaintiff offered documentation concerning BPWCP's alleged manipulation of fuel deliveries to his station showing that out of 27 fuel deliveries made between late July and mid-August 2008 (when fuel prices were allegedly falling), all but five, or 84 percent, were delivered before midnight, when the price decrease became effective. Plaintiffs argued that they had presented sufficient evidence to raise a triable issue as to whether BPWCP had used the AIMS system to manipulate fuel deliveries based on fluctuating fuel prices.
With regard to their promotional allowance claim, plaintiffs offered their own declarations stating that defendants not only kept manufacturer rebates and promotional allowances that properly belonged to plaintiffs, but also caused plaintiffs to forfeit such allowances and rebates by failing to download correct pricing information for promotional items to plaintiffs' computer systems.
Plaintiffs in their declarations also stated that BPWCP repeatedly overcharged them for fuel deliveries and then delayed repayment of the overcharges for weeks and months.
In moving for summary adjudication of plaintiffs' fifth cause of action for violation of Corporations Code section 31101, defendants argued that plaintiffs could present no evidence of any material modification of their respective franchise agreements.
In their opposition, plaintiffs argued that defendants' implementation of the AIMS system was a material modification of their existing franchises, as was the implementation of a "Retalix" computerized sales system.
The trial court granted defendants' motions for summary adjudication and denied plaintiffs' motion. Judgment was entered in favor of defendants, and this appeal followed.
A motion for summary adjudication is granted when the moving party establishes the absence of a triable issue of material fact and the right to entry of judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A defendant moving for summary adjudication meets its burden of proving that a cause of action has no merit by showing that one or more elements of a cause of action cannot be established or that there is a complete defense thereto. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853.) Once the defendant has made this showing, the burden then shifts to the plaintiff to show a triable issue of material fact exists as to that cause of action or defense. (Code Civ. Proc., § 437c, subd. (p)(2).)
On appeal from a summary adjudication, an appellate court makes "an independent assessment of the correctness of the trial court's ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law. [Citations.]" (Iverson v. Muroc Unified School Dist. (1995) 32 Cal.App.4th 218, 222-223, 38 Cal.Rptr.2d 35.) We review the record independently, considering all the evidence set forth by the parties, except that to which objections have been made and sustained (State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026, 1035), viewing the facts and inferences reasonably drawn from those facts most favorably to the appellant (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1520).
The UCL prohibits three types of unfair competition — acts or practices which are unlawful, unfair, or fraudulent. (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 181 (Cel-Tech).) Under the statute, "`a practice is prohibited as `unfair' or `deceptive' even if not `unlawful' and vice versa."' [Citations.]" (Id. at p. 180.)
The UCL does not define the term "unfair," and "courts have struggled to come up with a workable definition." (Gregory v. Albertson's, Inc. (2002) 104 Cal.App.4th 845, 851 (Gregory).) In determining whether a business practice is "unfair" and therefore prohibited by the statute, California courts have applied different tests, depending on whether the plaintiff is a competitor of the defendant or a consumer. (See, e.g., Cel-Tech, supra, 20 Cal.4th at p. 187, fn. 12; Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255, 1273-1274 (Bardin).)
In the context of competitors alleging anticompetitive acts, the California Supreme Court has adopted the following test for evaluating unfair business practices under the UCL: "When a plaintiff who claims to have suffered injury from a direct competitor's `unfair' act or practice invokes [Business & Professions Code] section 17200, the word `unfair' in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition." (Cel-Tech, supra, 20 Cal.4th at p. 187, fn. omitted.) In formulating this test, the court in Cel-Tech turned to federal law for guidance, in particular, section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(a)) and federal antitrust laws. Noting that the purpose of those laws is "`to foster and encourage competition'" (Cel-Tech, at p. 186), the court concluded that UCL claims of anticompetitive conduct among competitors must either be "tethered" to a specific law or regulation or based on proof of anticompetitive impact: "These principles convince us that, to guide courts and the business community adequately and to promote consumer protection, we must require that any finding of unfairness to competitors under [Business & Professions Code] section 17200 be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition." (Id. at pp. 186-187.) The court in Cel-Tech expressly limited its holding, however, to the factual circumstances presented in the case before it: "Nothing we say relates to actions by consumers or by competitors alleging other kinds of violations of the unfair competition law . . . ." (Id. at p. 187, fn 12.)
After Cel-Tech, appellate courts have been divided over whether the standard adopted by the California Supreme Court for evaluating "unfair" business practices under the UCL in competitor cases should also apply to UCL actions brought by consumers, or whether some other standard should apply. (See Drum v. San Fernando Valley Bar Assn. (2010) 182 Cal.App.4th 247, 256 (Drum), and cases cited therein.) Some Courts of Appeal have applied the test set forth in Cel-Tech to consumer actions and have required that such claims "be tethered to specific constitutional, statutory, or regulatory provisions." (Bardin, supra, 136 Cal.App.4th at pp. 1260-1261; Davis v. Ford Motor Credit Co. (2009) 179 Cal.App.4th 581, 595-596 (Davis); Gregory, supra, 104 Cal.App.4th at p. 854.)
Other appellate courts have applied two different versions of a balancing test that requires the reviewing court to weigh the utility of the alleged unfair business practice against the injury it causes. Under the first version of this test, the court determines whether the alleged business practice "is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers and requires the court to weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim. [Citations.]" (Bardin, supra, 136 Cal.App.4th at p. 1260.)
The second version of the balancing test draws on the definition of "unfair" in section 5 of the Federal Trade Commission Act (15 U.S.C. § 45, subd. (n)), and requires that "`"(1) The consumer injury must be substantial; (2) the injury must not be outweighed by any countervailing benefits to consumers or competition; and (3) it must be an injury that consumers themselves could not reasonably have avoided."' [Citations.]" (Drum, supra, 182 Cal.App.4th at pp. 254-257.)
It is unclear whether the tethering test for competitor cases or the balancing test for consumer cases would apply to plaintiffs' claim that they are entitled to the PayPoint fees and that BPWCP's retention of those fees is an unfair business practice. Plaintiffs are franchisees, not competitors of BPWCP, and are distributors rather than consumers of the products sold by defendants. Regardless of the test applied, however, plaintiffs fail to establish that defendants' retention of the PayPoint fees is an unfair business practice proscribed by the UCL.
Plaintiffs cannot establish that defendants' retention of the PayPoint fees is an unfair business practice under the tethering test for UCL competitor claims. Plaintiffs' claimed entitlement to the PayPoint fees is tethered to no applicable constitutional, statutory, or regulatory provision. Plaintiffs' primary argument is that the PayPoint fees are part of the common law "bundle of rights" they hold as owners and lessees of their property. But plaintiffs' reliance on common law principles of property ownership does not satisfy the requirement that their claim be tethered to a specific statutory or regulatory provision. (Textron Financial Corp. v. National Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061, 1072 ["reliance on general common law principles to support a cause of action for unfair competition is unavailing"].)
Plaintiffs attempt to base their claim on certain statutory provisions; however, those statutes do not apply to the circumstances presented here. For example, plaintiffs argue that BPWCP's retention of the PayPoint fees violates Civil Code section 731.05. That statute provides in part: "(c) All income, after payment of expenses properly chargeable to it, shall be paid and delivered to the tenant or retained by him if already in his possession or held for accumulation where legally so directed by the terms of the transaction by which the principal was established. . . ." Civil Code section 731.04 is part of the Legal Estates Principal and Income Law, which governs "the ascertainment of income and principal and the apportionment of receipts and expenses between tenants and remaindermen in all cases where a principal has been established without the interposition of a trust." (Civ. Code, §§ 731, 731.04.) Because the instant case does not involve the allocation of income and principal between tenants and remaindermen, Civil Code section 731.05 cannot serve either as a basis for relief or as the foundation for plaintiffs' UCL claim.
Plaintiffs' attempt to tether their claim to a purported violation of Corporations Code section 31101, subdivisions (c)(1)(F) and (c)(1)(G), is equally unavailing. Those statutory provisions apply to fees that a franchisee "is required to pay to the franchisor," and require the franchisor to disclose in writing the following information at least ten business days prior to the execution of any binding franchise or other agreement:
It is undisputed that the PayPoint convenience fee is paid by plaintiffs' customers, and not by plaintiffs. Corporations Code section 31101, subdivisions (c)(1)(F) and (G) therefore do not apply.
In addition to having no constitutional, statutory, or regulatory basis for their claimed entitlement to the PayPoint fees, plaintiffs offer no proof that BPWCP's retention of those fees significantly threatens or harms competition. Their UCL claim accordingly fails, as a matter of law, under the standard set forth by the California Supreme Court in Cel-Tech, supra, 20 Cal.4th 163.
Plaintiffs' PayPoint claim also fails under either version of the balancing test for UCL consumer claims. Plaintiffs present no evidence that defendants' retention of the PayPoint fees "is immoral, unethical, oppressive, or unscrupulous." (Bardin, supra, 136 Cal.App.4th at p. 1260.) Although plaintiffs claim to "have always understood" that they are entitled to the PayPoint fees as part of "gross sales" as defined in the Contract Documents, there is no evidence to support that understanding. The Contract Documents define "gross sales" solely for purposes of calculating royalty fees to be paid by plaintiffs to BPWCP, not for purposes of any right or entitlement of plaintiffs. The definition of "gross sales" thus has no bearing on whether plaintiffs are entitled to payments received by BPWCP. Plaintiffs can point to no other provision in the Contract Documents that gives them any right to the PayPoint fees.
Plaintiffs present no evidence of any injury to the public — the consumers of the PayPoint service. Plaintiffs' claimed injury to themselves — that they are required by the Contract Documents to pay for and maintain the PayPoint system yet receive no portion of the PayPoint fees — is disclosed in the Contract Documents.
Plaintiffs' purported injury must be weighed against the utility of the PayPoint system both to plaintiffs and to the public. (Bardin, supra, 136 Cal.App.4th at p. 1260; Davis, supra, 179 Cal.App.4th at pp. 594-595.) The PayPoint system benefits customers who wish to purchase gasoline and other products with a debit card rather than cash. The PayPoint system also benefits plaintiffs, who derive revenue from sales that are facilitated by their customers' ability to make debit card purchases. Plaintiffs' own evidence showed that PayPoint sales transactions are substantial, numbering between 200 and 600 per day at certain of their franchise locations.
Plaintiffs' UCL claim with regard to the PayPoint fees fails, as a matter of law, under the balancing test applicable to UCL consumer claims. (Bardin, supra, 136 Cal.App.4th at p. 1260; Drum, supra, 182 Cal.App.4th at pp. 254-257.) The trial court did not err by granting summary adjudication of this claim in favor of defendants.
Plaintiffs' third cause of action alleges that BPWCP violated the UCL based on (1) its operation of the AIMS system; (2) alleged errors in downloading certain promotional pricing information; and (3) delays in reimbursing plaintiffs for allegedly erroneous gasoline charges. As we discuss, summary adjudication was properly granted as to each of these claims.
Plaintiffs fail to establish that BPWCP's operation of the AIMS automated gasoline delivery system is an unfair business practice under either the tethering test for competitor claims or the balancing test for consumer claims under the UCL.
Plaintiffs' AIMS claim is tethered to no applicable statutory, constitutional, or regulatory provision. Although plaintiffs assert that BPWCP's implementation of the AIMS system violated Corporations Code section 31101, subdivision (c)(1), that statute does not apply. Section 31101 mandates a 10-day notice period for franchisees to opt out of any material modification of a franchise agreement:
(Corp. Code, § 31101, subd. (c)(2).)
Implementation of the AIMS system was not a material modification of the parties' franchise agreement. That agreement expressly accords BPWCP the right to deliver gasoline to franchisees solely through an automated delivery system, and to determine when and how much fuel to deliver:
Because the Contract Documents at the outset accord BPWCP the right to use an automated gasoline delivery system, implementation of the AIMS system was not a material modification of the parties' agreement. Corporations Code section 31101, subdivision (c)(2) therefore does not apply.
Plaintiffs presented no evidence that the AIMS system has any anticompetitive impact. Their principal complaint is that BPWCP manipulated fuel deliveries so that plaintiffs, and not defendants, bore the risk of fuel price fluctuations. Even assuming plaintiffs' own declarations were sufficient to raise a triable issue concerning BPWCP's alleged manipulation of fuel deliveries, plaintiffs failed to prove that such conduct "significantly threatens or harms competition." (Cel-Tech, supra, 20 Cal.4th at p. 187.)
Plaintiffs' secondary complaint — that they receive excessive deliveries when fuel prices are falling, and experience shortages when prices are rising — also fails to establish any significant threat or harm to competition. The allegations, if true, would place defendants as well as their franchisees at a competitive disadvantage relative to other gasoline retailers. There is no evidence that defendants' use of the AIMS system harms or threatens harm to competition.
Plaintiffs' UCL claim regarding the AIMS system also fails as a matter of law under the balancing test applicable to consumer claims. Plaintiffs presented no evidence that use of the AIMS system causes injury to the public. Plaintiffs' claimed injury to themselves — that they must accept and pay for fuel deliveries made, at BPWCP's sole discretion, in accordance with an automated fuel delivery system — is expressly provided for in the Contract Documents. The UCL "`does not give the courts a general license to review the fairness of contracts.'" (California Medical Assn. v. Aetna U.S. Healthcare of California, Inc. (2001) 94 Cal.App.4th 151, 169-170.)
Plaintiffs' purported injury — that they, rather than defendants, must bear the risk of fuel price fluctuations between fuel orders and fuel deliveries — must also be weighed against the utility of the automated system to defendants and their franchisees as a whole. (Bardin, supra, 136 Cal.App.4th at p. 1260; Davis, supra, 179 Cal.App.4th at pp. 594-595.) Defendants presented evidence that an automated delivery system makes it easier to coordinate gasoline deliveries across a broad network of stations and to minimize shortages on a regional basis.
The trial court did not err by granting defendants' motion for summary adjudication of this claim.
Plaintiffs contend the trial court erred by granting summary adjudication against them on their claim that defendants keep promotional allowances and rebates from vendors that belong to the franchisees, and that such conduct constitutes an unfair business practice under the UCL.
Under the Contract Documents, plaintiffs expressly assigned to defendants the right to receive marketing, advertising, promotional, volume, and retail display allowances offered by any supplier. Paragraph 12.02 of the Store Agreement states in relevant part:
Plaintiffs present no evidence to support their claimed entitlement to promotional allowances they expressly assigned to BPWCP, and they make no showing that their assignment of the right to receive such promotional allowances was unlawful, unfair, or harmful to consumers. Their UCL claim regarding promotional allowances therefore fails as a matter of law.
Plaintiffs seek to avoid summary adjudication by arguing that defendants incorrectly downloaded promotional price information into their computer systems, and that these pricing errors caused plaintiffs to lose money because promotional items were not sold at the correct price. As the trial court noted, plaintiffs did not include this allegation in their operative third amended complaint and therefore cannot now oppose summary adjudication on that basis. (Paduano v. American Honda Motor Co., Inc. (2009) 169 Cal.App.4th 1453, 1495.)
The trial court did not err by granting summary adjudication of plaintiffs' promotional allowance claim.
Plaintiffs contend the trial court erred by summarily adjudicating their claim that defendants repeatedly overcharged them for fuel deliveries and failed to reimburse them for these overcharges until many months later. Plaintiffs do not dispute that they were reimbursed for all overcharges. Monetary relief under the UCL is limited to restitution; damages may not be recovered. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144, 1149.) The relief sought by plaintiffs, for "temporary loss of use of their funds" is not available under the UCL. The trial court did not err by granting summary adjudication of the gasoline reimbursement claim.
Plaintiffs' fifth cause of action alleges that defendants violated Corporations Code section 31101 by failing to disclose rebates defendants received from vendors, failing to provide a "complete list" of approved cigarette dealers, and modifying plaintiffs' contracts without sufficient notice. Summary adjudication was properly granted as to each of these claims.
Plaintiffs contend defendants violated Corporations Code section 31101, subdivisions (c)(1)(F) and (c)(G) by failing to disclose all royalties, payments and fees BPWCP received from third party vendors. The statutory provisions on which plaintiffs rely do not require the disclosure of vendor rebates.
Corporations Code section 31101, subdivision (c)(1)(F) requires the disclosure of the franchise fee charged to franchisees. "Franchise fee" is defined as "any fee or charge that a franchisee or subfranchisor is required to pay or agrees to pay for the right to enter into a business under a franchise agreement." (§ 31011.) Vendor rebates are not franchise fees that plaintiffs are required to pay to defendants for the right to enter into a business under their franchise agreements. Rather, vendor rebates are paid directly to BPWCP under the Contract Documents pursuant to an express assignment by plaintiffs. Section 31101, subdivision (c)(1)(F) therefore does not apply.
Corporations Code section 31101, subdivision (c)(1)(G) requires disclosure of "any payments or fees other than franchisee fees that the franchisee . . . is required to pay to the franchisor, including royalties and payment or fees which the franchisor collects in whole or in part on behalf of a third party or parties." A vendor rebate is not a royalty, payment or fee that BPWCP collects on behalf of any third party. Under the terms of the Contract Documents, vendor rebates are paid directly to BPWCP and used by BPWCP for promotional and marketing efforts in its network of am/pm stores. Section 31101, subdivision (c)(1)(G) therefore does not apply.
The trial court did not err by granting summary adjudication as to plaintiffs' vendor rebate claim.
Plaintiffs contend BPWCP violated Corporations Code section 31101 by failing to disclose a complete list of approved cigarette vendors. That statute requires the franchisor to disclose in writing to a franchisee "[a] statement as to whether, by the terms of the franchise agreement or by other device or practice, the franchisee or subfranchisor is required to purchase from the franchisor or his or her designee services, supplies, products, fixtures, or other goods relating to the establishment or operation of the franchise business, together with a description thereof." (§ 31101, subd. (c)(1)(I).)
Plaintiffs provide no evidence to support their claim that BPWCP requires franchisees to purchase cigarettes from approved vendors only. Defendants, on the other hand, presented evidence that franchisees are free to purchase cigarettes from any vendor, so long as the cigarettes are not counterfeit products, the appropriate taxes have been paid, and the franchisee is not engaged in re-retailing.
Plaintiffs contend the trial court erred by summarily adjudicating their claim that BPWCP violated Corporations Code section 31101, subdivision (c)(2) by implementing the AIMS system and by requiring franchisees to purchase updated computer sales equipment (the Retalix system) without providing franchisees adequate notice. Section 31101, subdivision (c)(2) requires a franchisor to provide written notice to a franchisee of any material modification of an existing franchise and the opportunity to opt out of the modification within 10 days after receipt of such notice.
BPWCP's implementation of the AIMS system was not a modification of the franchise agreement, but an exercise of a right expressly reserved in that agreement.
The trial court did not err by granting summary adjudication of this claim.
Defendants met their burden of proving that plaintiffs' UCL claims fail as a matter of law. Plaintiffs failed to establish that the business practices they complain of were "unfair" under any of the tests used by California courts to evaluate unfair business practices under the UCL. Defendants also met their burden of proving that plaintiffs' claims for violation of Corporations Code section 31101 have no merit because there was no material modification of the terms of the parties' franchise agreement. Plaintiffs failed to raise any triable issue of material fact regarding any of their claims. Summary judgment was properly granted in favor of defendants.
The judgment is affirmed. Defendants are awarded their costs on appeal.
We concur.
BOREN, P. J.
DOI TODD, J.
