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United Stations of New Jersey v. Getty Oil Co.

Decided: August 1, 1968.

UNITED STATIONS OF NEW JERSEY (US), A CORPORATION OF NEW JERSEY, AND NICHOLAS DEL SPINA, PLAINTIFFS,
v.
GETTY OIL COMPANY, A DELAWARE CORPORATION, SHELL OIL COMPANY, A DELAWARE CORPORATION, ATLANTIC RICHFIELD COMPANY, A DELAWARE CORPORATION, ALL DOING BUSINESS IN NEW JERSEY; HUMBLE OIL AND REFINING COMPANY, A NEW JERSEY CORPORATION; CLIFTON CREECH, T/A CLIFF'S AUTO SERVICE, INDIVIDUALLY AND AS REPRESENTATIVE OF A CLASS OF RETAIL MOTOR FUEL DEALERS ENGAGING IN SHELL OIL COMPANY'S "AMERICANA" GAME; GEORGE W. SCHUTZ, T/A WERNER'S AUTO SERVICE, INDIVIDUALLY AND AS REPRESENTATIVE OF A CLASS OF RETAIL MOTOR FUEL DEALER'S ENGAGING IN ATLANTIC OIL COMPANY'S "MATCH THE RED BALL" CONTEST; MATTHEW DE ROSA, T/A DE ROSA FLYING A, INDIVIDUALLY AND AS REPRESENTATIVE OF A CLASS OF RETAIL MOTOR FUEL DEALERS ENGAGING IN GETTY OIL COMPANY'S "MAKE MONEY" CONTEST; AND PETER BONAGURA, T/A REDWOOD ESSO SERVICE CENTER, INDIVIDUALLY AND AS REPRESENTATIVE OF A CLASS OF RETAIL MOTOR FUEL DEALERS ENGAGED IN HUMBLE OIL AND REFINING COMPANY'S "WILD CARD TIGERAMA" CONTEST, DEFENDANTS



Mintz, J.s.c.

Mintz

Plaintiff Nicholas Del Spina operates a Mobil filling station at 460 Main Street, Orange, N.J. His complaint alleges that retail service station dealers are conducting certain giveaway contests in violation of N.J.S.A. 56:6-2(f) which provides that:

"It shall be unlawful for any retail dealer to use lotteries, prizes, wheels of fortune, punch-boards or other games of chance, in connection with the sale of motor fuels."

The theory of plaintiff's suit is that defendants, by promoting and conducting contests which he claims are in violation of the law, are engaging in unfair competition to his injury. His complaint seeks injunctive relief against the named major oil and refining companies and against the named retail dealers, individually and as class representatives for service station dealers throughout the State conducting such giveaway contests and selling motor fuels for said named oil companies.

Prior to trial Del Spina moved for summary judgment which was denied. The opinion rendered in connection with the disposition of that motion is reported as United Stations of New Jersey v. Kingsley, 99 N.J. Super. 574 (Ch. Div.

1968). Therein I held that plaintiff, as a retail dealer, could maintain a common law action of unfair competition against his competitors if he could prove that their conduct violated N.J.S.A. 56:6-2(f) and was injurious to him. Thus, any possible injunctive relief would be territorially limited to those defendants operating in plaintiff's competitive area; the scope of the alleged classes of retail dealers would be similarly delimited.

Since the filing of my opinion on plaintiff's summary judgment motion, defendants Peter Bonagura and Matthew De Rosa have been joined as parties defendant in the capacities of individuals and class representatives of retailers in the competitive area who conduct giveaways and sell products of the Humble Oil and Refining Company (hereinafter Humble) and Getty Oil Company (hereinafter Getty), respectively. De Rosa purchased a Getty station from Anthony Recchia during the course of the litigation and was substituted for him as a defendant. At the trial the action against defendant Schutz, individually and as class representative for retail dealers in plaintiff's competitive area selling motor fuels distributed by Atlantic Richfield Company (hereinafter Atlantic), was stayed because of his present military service. The complaint of United Stations of New Jersey and the counterclaim filed against it and co-plaintiff Del Spina have been dismissed.

In the approximately 16 months since the filing of the complaint the giveaway contests therein referred to were discontinued for varying intervals and then replaced by other games. Getty's "Flying Aces" was superseded by "Make Money." Atlantic's "Match The Red Ball" was replaced by the current "On The Go." Humble's "Tigerama" was replaced by "Winning Ticket." Shell Oil Company (hereinafter Shell) terminated "Americana" on May 31, 1967 and reactivated it for the period August 25 to November 30, 1967. Its third promotion, "Spell Americana," started February 1, 1968 and terminated the first week in June 1968. Shell represented at the trial that if it suffers competitive

losses as a result of this discontinuance, it proposes to start another type of game.

As I noted in my earlier opinion:

"The contests sponsored by the respective oil companies are the same in principle. No contest requires the public to purchase any merchandise as a condition for participation and no retail service station operator is required to conduct a contest sponsored by his oil company. The oil companies sell to willing retail service station operators quantities of contest tickets or slips and supply these dealers with other promotional materials. Although the profusion of the games has given birth to numerous contest forms, generally if a contestant obtains matching tickets or slips he is entitled to a prize. The lesser cash and consumer goods prizes are paid or dispensed by the retail dealer who is reimbursed by his oil company. The larger prizes are paid or dispensed directly by the sponsoring major oil companies. In most instances the distribution of contest slips is restricted to licensed drivers who enter the retailers' premises and ask for them, although some companies instruct their participating retailers to issue slips to any service station visitor who requests them." 99 N.J. Super., at p. 579.

The testimony developed at the trial confirms that observation. Furthermore, participants are required to appear at retail service stations to collect their prizes if they win. Additionally, in some contests one can now become a winner by merely obtaining a single ticket with a winning symbol, and some dealers have apparently arranged for game pieces to be given away at locations other than their own premises. It is undisputed that the various giveaway contests involve no skill on the part of players; winners are determined by pure chance.

On the motion for summary judgment defendants urged that because of the "no purchase necessary" feature of their contests, the contests were not "games of chance" under the intendment of the statute. At trial defendants did not press the point that without consideration -- cash or other valuable thing -- their contests could not be so classified. The statute of which N.J.S.A. 56:6-2(f) forms a part is entitled "An act to regulate the retail sale of motor fuels," N.J.S.A. 56:6-17. Thus, the purpose of this whole statute

is regulation of competitive practices in the retail motor fuel business, and it is from this standpoint that the provision's prohibition of "games of chance" should be viewed. In my earlier opinion (at p. 586) I quoted from 1 Callmann, Unfair Competition, Trademarks and Monopolies (3 d ed. 1967), ยง 31, p. 1056, where the author stated that from a competitive aspect, consideration in a lottery or the like is not only an insignificant element but its absence renders the game device much more effective in attracting attention. For that reason I conclude that despite the "no purchase necessary" feature of defendants' contests, they are "games of chance" within the meaning of N.J.S.A. 56:6-2(f).

Assuming arguendo that consideration is required under N.J.S.A. 56:6-2(f), it must be noted that the definition of a lottery in the criminal Lottery Act, N.J.S. 2 A:121-6, does not control the trade regulatory provision at issue. 99 N.J. Super., at pp. 585-586. In requiring the participant to visit the retail dealer's premises, the dealer receives consideration in the expectation that this lure will result in an increase in his motor fuel sales. See Lucky Calendar Co. v. Cohen, 19 N.J. 399 (1955). As will hereinafter appear, this expectation has frequently been fulfilled.

Defendants stress that even if their giveaways are "games of chance," the fact that participants need not purchase motor fuel in order to enter the contests proves they are not operated "in connection with the sale of motor fuels." They argue that the only way to accord meaning to this phrase is to construe N.J.S.A. 56:6-2(f) so that the only illegal giveaways in the motor fuel industry are those in which participation is conditioned upon a sale of motor fuel. Moreover, it is their position that the principal purpose of the giveaway promotions it not to effect immediate increases in retail gasoline sales but to attract prospective customers to the stations where they may be exposed to the service rendered by the respective dealers. If the service rendered the visiting motorist is good, the dealer has a chance to gain a regular customer.

The testimony by Robert L. Berg, Shell district manager for Newark, that the purpose of the games was to stimulate fuel sales, supports plaintiff's allegation that the "no purchase necessary" feature is a mere shield for the fundamental connection of these games with motor fuel sales. The fact that participating dealers were instructed to gauge their requisitioning of game pieces by the number of gallons of gasoline they usually pumped provides still further support of this link. The proofs also indicate that the respective oil companies, at meetings during which the games were introduced to their New Jersey dealers, emphasized the prospective increases in motor fuel sales to be gained through the use of such contests. This same desire of the sponsoring oil companies to rapidly stimulate motor fuel sales is further evidenced in Atlantic's "Dealer's Guide", distributed as instructions for its "Match the Red Ball Game." On page 4 the oil company states to its dealers that its giveaway

"'MATCH THE RED BALL' is designed to produce SUBSTANTIAL INCREASES IN STATION TRAFFIC AND VOLUME after the first 2-3 introductory weeks.

Experience indicates that you can expect increases of AT LEAST:

50% IN TRAFFIC

40% IN ...


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