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Speedway Sues N.J. Over Below-Cost Gas Law

ENON, Ohio — Speedway LLC has filed a lawsuit against the state of New Jersey alleging that its law prohibiting below-cost vehicle fuel sales is unconstitutional because it violates the common-law right to sell goods at any price upon which the retailer and purchaser agree.

The lawsuit was filed Feb. 13 in Mercer County Superior Court, reported Law360

The 1938 law states that no retailer may sell gasoline at a price less than the net cost to the retailer. Speedway argues that the state legislature never attempted to define net cost but still subjected violators to criminal penalties. The lawsuit also argues that the law imposes restrictions on free trade and legitimate and innocent competition when there is no intent to inflict injury, and provides no benefit to anyone, the news outlet reported.

The law "flagrantly violates plaintiffs retailers' due process rights under the United States Constitution, the New Jersey State Constitution, the Federal Civil Rights Act and the New Jersey Civil Rights Act and common law; fundamentally conflicts with binding and persuasive authority; and is otherwise arbitrary, capricious and unreasonable," according to the filing.

Five violations of the due process clause of the Constitution are listed in the lawsuit: the absence of an intent-to-injure requirement; the lack of a "meeting-competition" defense, under which a seller can argue its intent was to meet competition and not beat it; abrogation of the common-law right to sell goods; vagueness; and overbreadth.

Speedway seeks a declaration that the law is unconstitutional, preliminary and permanent injunctive relief and court costs and attorneys' fees.

In support of its argument, Speedway noted that for decades, state and federal courts have upheld those rights, limiting them only to preclude the seller from injuring or destroying competition. Additionally, alleged constitutional defects in the law have already prompted lawmakers to introduce amendments that would have established an intent-to-harm requirement and a meeting-competition defense in 2008, 2010 and 2014.

Speedway is currently facing two lawsuits filed by the state of New Jersey alleging that it sold gas below cost at a location in Hopelawn, N.J. Brian J. Molloy of Wilentz Goldman & Spitzer PA represents the company.

Enon-based Speedway, a Marathon Petroleum Corp. subsidiary, owns and operates the nation's second-largest convenience store chain, with approximately 2,770 convenience stores in 22 states.

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