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December 10, 1982

Robert JOHNSON, d/b/a 62nd & York Service Center, Inc., Plaintiff,
MOBIL OIL CORPORATION and Station Managers, Inc., Defendants

Sand, District Judge.

The opinion of the court was delivered by: SAND

SAND, District Judge.

Plaintiff Robert Johnson has operated a Mobil Oil Corporation (Mobil) full-service gasoline station in New York City from 1972 to the present. On September 9, 1982, defendant Station Managers, Inc. (SMI), a wholly-owned Mobil subsidiary, notified Johnson that it intended to terminate its business relationship with him pursuant to the contract between the parties. SMI asked that Johnson vacate the station by September 15, 1982.

 Johnson now seeks to enjoin SMI and Mobil from taking any further actions to remove him as the operator of the service station on the grounds that they have failed to comply with the requirements of the Petroleum Marketing Practices Act ("PMPA" or the "Act"), 15 U.S.C. Secs. 2801-2841, and the New York motor fuel franchise act, New York General Business Law, Secs. 199-a through 199-d (McKinney Supp.1981). *fn1"

 The PMPA, as well as its state law counterpart, provides procedural and substantive protections to franchised service station operators, including notice of termination and termination only for cause. Defendants have filed a cross-motion for partial summary judgment with respect to plaintiff's claims under the PMPA and the New York franchise act. Defendants also seek a declaration that plaintiff's termination was lawful and an injunction requiring him to vacate the station.

 The current contract between Johnson and SMI is terminable at the will of either party at any time. Defendants' position, quite simply, is that the relationship between Johnson and SMI is governed by the strict terms of the contract. According to defendants, Johnson is an employee of SMI with regard to the sale of motor fuel, not an independent franchisee, and therefore does not qualify for the added protections of the PMPA and the New York franchise act. Plaintiff contends, by contrast, that his status with respect to SMI and Mobil is that of an independent businessman and franchisee, entitled to the full procedural and substantive protections of both the federal and state franchise laws.

 At the request of the plaintiff and with defendants' consent an evidentiary hearing was held before the Court limited to the question of the applicability of the PMPA and the New York franchise act to this case. The parties agreed that on these issues the hearing and findings of the Court would be conclusive for all purposes in their litigation, i.e., that they would not be limited to the pending motions for preliminary or summary relief. The following constitutes the Court's findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).


 The plaintiff, Robert Johnson, has operated a Mobil service station located at 62nd and York Avenue in New York City since 1972. The station is one of the largest and highest-volume Mobil stations in the area and is considered by Mobil to be one of its "model" stations. The business relationship between Johnson and the defendants during this period has been governed by three contracts, signed in 1972, 1974 and 1980 respectively. The parties to each of these contracts were Johnson and Station Managers, Inc., a wholly-owned Mobil subsidiary. Of the over 300 dealer-operated stations in New York City, only three are operated as SMI stations.

 Under the terms of the 1980 contract, Johnson is paid a fixed monthly salary of $600. He receives in addition a monthly commission of 1/2 cent per gallon based on the volume of motor fuel sold in excess of 60,000 gallons per month. *fn2" Johnson's commission is based solely on volume, and does not vary with motor fuel price, which is set by SMI.

 Plaintiff also operates a full-service automotive repair business at the station pursuant to the contract. The equipment necessary to operate the repair service is owned by Mobil and loaned to Johnson without charge in accordance with an Equipment Loan Agreement. Tires, batteries and other accessories are delivered to Johnson by Mobil without charge for sale to the public under the Mobil trademark. Johnson receives a commission on the sale of these items pursuant to a number of agreements with SMI entered into between 1972 and the present.

 Johnson is responsible for hiring all employees necessary to operate both the motor fuel and repair aspects of the service station. He sets their salaries and determines their hours of work. Under the contract, Mobil furnishes Johnson with a "labor budget," which is its estimate of the wages necessary to operate the motor fuel sales aspects of the station's operation. All expenditures for personnel that exceed this budget must be furnished by Johnson. All personnel working at the station are SMI employees in the sense that SMI issues the salary checks for all employees, including Johnson. It withholds all federal, state and local taxes and social security, and pays workmen's compensation premiums. Johnson reimburses SMI for all employee salary payments, including taxes and fringe benefits, to the extent they exceed the labor budget.

 Each day Johnson remits to Mobil an amount in accordance with the previous day's receipts from the sale of motor fuel. Cash proceeds are remitted in the form of a certified check drawn on Johnson's own business account. Credit slips are remitted to reflect sales made by Mobil credit cards.

 Mobil determines the grades of motor fuel that will be sold at the station and the price at which they will be sold. All motor fuel sales taxes are collected by Johnson as part of the gasoline sales price and remitted to Mobil. Mobil then remits the tax to the proper taxing authority.

 With respect to the maintenance of the station, Mobil pays for general restroom supplies, station supplies such as paint, postage and stationery, and all utilities; Johnson selects the suppliers. Daily cash shortages, shortages for product variation, and "runaways" (where a customer drives off without paying for gasoline) are, as a rule, reimbursed by Mobil. In some instances Johnson absorbs such losses. Johnson is responsible ...

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