The United States District Court for the District of Oregon recently denied a motion to dismiss a putative nationwide class action brought against Shell Oil for alleged breach of contract, false advertising and an array of state consumer protection allegations.

In the action captioned Kearney v. Equilon Enterprises, LLC d/b/a Shell Oil Products US, 14CV254, Shell Oil moved to dismiss the putative class action complaint. While the court dismissed several state law statutory claims, the court refused to dismiss plaintiffs’ nationwide breach of contract claim.

The Shell Oil Advertisement: A Contract with Consumers?

Specifically, the advertisement at issue in the action was part of Shell’s “Ski Free” promotion and, according to Plaintiffs, promised: “Buy 10 gallons of fuel, get a voucher for a free lift ticket.”  In reality, once Plaintiffs purchased ten gallons of fuel, they received a “two for one” coupon that allowed applicable consumers the right to obtain a free lift ticket only after purchasing a lift ticket at full price at a participating ski resort.

The only advertisement that the Plaintiffs saw was a sign promising a free ski lift ticket if they purchased ten gallons of fuel.  The Court held that the “clear offer in the advertisement established a unilateral contract, and Plaintiffs accepted the offer through performance by purchasing ten gallons of fuel at a Shell station participating in the ‘Ski Free’ promotion.”  From the clear language of the advertisement, the Court held that it was reasonable for a consumer to believe that if he or she purchased ten gallons of fuel at a participating Shell gas station, he or she would get a free lift ticket. Therefore, the Court denied Shell’s motion to dismiss the breach of contract cause of action and allowed the false advertising class action to proceed.

The Importance of Truth in Advertising

The Federal Trade Commission and the plaintiffs’ class action bar closely scrutinize the truth (or deceptiveness) of all types of advertising and marketing materials.  Large settlements and court judgments have been entered against advertisers and retailers that fail to follow applicable state and federal advertising rules and regulations.  As such, it is critical for marketers to secure seasoned advertising counsel in connection with prospective marketing campaigns or risk facing a false advertising investigation or lawsuit.