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Atlantic Autocare, Inc. v. Shell Oil Products Company LLC

March 11, 2009

ATLANTIC AUTOCARE, INC., ET AL., PLAINTIFFS,
v.
SHELL OIL PRODUCTS COMPANY LLC (F/K/A SHELL OIL PRODUCTS COMPANY), SHELL OIL COMPANY, AND MOTIVA ENTERPRISES LLC, DEFENDANTS.



The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge

OPINION & ORDER

Plaintiffs currently operate-or have operated-gas stations in the New York City area. They sell either "Shell" or "Texaco" brand gasoline under franchise agreements with defendant Motiva Enterprises LLC, a joint venture of the Shell Oil Company, Texaco, Inc., and Saudi Aramco.

Plaintiffs allege that Motiva, as well as defendants Shell Oil Products Company LLC and Shell Oil Company, have terminated or "constructively terminated" their franchise agreements in violation of the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. §§ 2801-06. Plaintiffs also allege that defendants have breached the parties' franchise agreements by setting gasoline prices in violation of the open price term provision of N.Y. U.C.C. § 2-305.

Following fact and expert discovery, defendants have moved for summary judgment with respect to each of plaintiffs' claims. Summary judgment for defendants is granted. First, a claim of "constructive termination" under the PMPA is actionable only in the context of an assignment of a franchise agreement, and plaintiffs admit that they have not brought a constructive termination claim based on an assignment. Second, plaintiffs have failed to offer evidence in support of a claim of actual termination under the PMPA. Third, based on the evidence in this record, no reasonable finder of fact could conclude that defendants have violated N.Y. U.C.C. § 2-305 by setting the price of gasoline in bad faith.

I. BACKGROUND

The Second Amended Complaint originally contained five claims for relief, but plaintiffs voluntarily withdrew Count Three, which alleged violations of the Robinson-Patman Act, 15 U.S.C. § 13a (Order, June 13, 2008). In addition, Count Five, which alleged a breach of contract based on defendants' automated gas delivery system, was dismissed pursuant to Fed. R. Civ. P. 12(b)(6) (Order, Apr. 13, 2007).

Furthermore, many of the original thirty-two plaintiffs are no longer a part of this action. Nine plaintiffs voluntarily withdrew (Order, Sept. 18, 2007; Order, Mar. 7, 2008), and one was dismissed for failure to respond to discovery requests (Order, July 13, 2007). Summary judgment was granted with respect to six plaintiffs that had signed releases barring their claims against defendants. (Order, Mar. 7, 2008.)

There are now three claims remaining in this action. Plaintiffs assert two counts based on the PMPA-one for injunctive relief (Count One) and one for money damages (Count Two)- and one count (Count Four) based on the open price term provision of N.Y. U.C.C. § 2-305.

II. DISCUSSION

Summary judgment is appropriate if the evidence shows "that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In determining whether a genuine issue of material fact exists, the Court "is to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Patterson v. County of Oneida, 375 F.3d 206, 219 (2d Cir. 2004). The non-moving party, however, "may not rely on mere conclusory allegations or speculation, but instead must offer some hard evidence" in support of its factual assertions. D'Amico v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998).

A. "Constructive Termination" Under the PMPA

Plaintiffs allege that defendants have charged "unconscionably high rents," "control[ed] Plaintiffs' requests for the delivery of gasoline," "increased prices for wholesale gas," and directly competed with plaintiffs "in the retail sale of gasoline." (Second Am. Compl. ¶¶ 106, 112-13.) All of this, plaintiffs claim, has been part of an effort by defendants to "constructively terminate" the parties' franchise agreements in violation of the PMPA. (Id.)

The Second Circuit has not yet determined whether to recognize claims of "constructive termination" under the PMPA.*fn1 Defendants, therefore, urge this Court to hold that constructive termination claims are never actionable under the PMPA. Plaintiffs, in turn, ask this Court to hold that constructive termination claims are actionable under the standards articulated by the First Circuit in Marcoux v. Shell Oil Prods. Co., 524 F.3d 33, 45 (1st Cir. 2008), and the Fourth Circuit in Barnes v. Gulf Oil Corp., 795 F.2d 358, 360-64 (4th Cir. 1986). Whether or not constructive termination claims are actionable need not ...


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