Fontes v. Heritage Operating

Complaint filed on May 7, 2014

Within the last four years preceding the filing of this action, Plaintiff, and all putative class members, were propane-purchasing customers of HERITAGE, AMERIGAS and various entities owned by HERITAGE and AMERIGAS, doing business under various local names, such as Pro-Flame of Julian; Pro-Flame of Ramona; Pro-Flame of Barstow, etc.

Plaintiff and the putative class members purchase propane from Defendants for the reason that they are suburban residents and have no direct, underground natural gas availability.

With respect to physical acquisition and delivery of propane, during the period embraced by this action, the process worked thusly: Defendants acquire the propane in large quantities from suppliers, who deliver it to various propane yards throughout this state, owned and operated by Defendants. The propane is delivered in large trucks, and injected, in liquid form, into holding tanks (usually 30,000 gallon capacity) located at such propane yards. Then, using its own propane delivery trucks, Defendants load such trucks from their tanks in the yards, and inject it into the tanks (still in liquid form) of its many customers within this State. In some cases, the residential/business tanks are owned by the putative class member, and in some cases, the residential/business tanks are leased by the Defendants to the putative class member.

While the pricing of propane in this state is unregulated, theoretically allowing Defendants to charge whatever they might chose for the delivery of propane, Defendants systematically mislead Plaintiff, and other members of the putative class about how the price was calculated. As the acquisition cost of propane varies from day to day on a spot market basis, Defendants, through their many local offices in this state, advertise to customers, both prospective and existing, that the customers would be charged, at every delivery, a “laid-in cost”, representing cost of the purchase of the propane from large suppliers and ultimate delivery costs, plus an amount on top of the laid-in cost that is negotiated between the customer and HERITAGE. The latter number would vary from customer to customer.

During the statutory period embraced by this action, the laid-in cost, which forms the basis of the cost to each customer, is determined on a daily basis by HERITAGE, at its home offices in Helena, Montana, by calculating the fuel acquisition costs of Defendants, plus holding and delivery costs, with the fuel acquisition costs on any particular day being averaged in with the acquisition costs of propane still remaining in any particular yard holding tank on the premises of the various offices of Defendants. Daily, Defendants transmit to their various offices throughout this State, through the internet, a document entitled “Service Center Inventory Panel”, which designates the laid-in price for each particular day. This daily laid-in price is used by employees of Defendants to advise customers and prospective customers of what the daily laid-in cost is, so that the customers supposedly know what they are being charged for the propane they purchase. The amount per gallon that any particular customer would pay on top of the daily laid-in cost varied from customer to customer, but at any rate, all ultimate charges to the customer are based upon the daily-transmitted Service Center Inventory Panel sent from the HERITAGE Central Office to the many local offices within this State.

The deceptive conduct upon which this action is primarily based occurred, over the statutory period embraced by this case, in the following manner: Everyday, upon receiving the above-described data from the home office, an employee of each individual office prepares and distributes to other employees a document entitled Prices File Listing. This daily price listing, however, does not state the true laid-in costs, but rather an inflated laid-in cost. Upper management employees of Defendants would systematically and deceptively inflate the laid-in cost by a certain amount, raising the rates paid by Plaintiff and members of the putative class. By way of example, if there were a particularly warm January, and thus relatively small amounts of propane were ordered by members of the putative class, management would ignore the true laid-in costs figure stated in the daily transmission from the HERITAGE Home Office, and falsely inflate it, in order to meet the financial goals of the various offices. In short, the result of this is that the customers would not be given the true laid-in costs for any particular day, but rather, would be given a completely false and inflated number, and then pay the agreed-upon profit margin on top of that.

The Prices File Listings are used routinely, day after day, during the statutory period
embraced by this action, as a tool which is distributed to employees at the various offices of Defendants, to falsely advertise the nature of the bargain that putative class members are actually receiving.

While the bargain between Defendants and its various customers varies from case to case with respect to the amount paid on top of the laid-in price, the deceptive overcharge amount remained consistent in every event; by way of example, if customer A were charged laid-in price plus a $1.30, and customer B were charged laid-in price plus a $1.50, they would both be deceived out of an equal sum per gallon, as the falsely-inflated laid-in price was applied across the board.

View Fontes v. Heritage Operating Complaint