Opinion
Civil Action No. 01-11300-RWZ.
October 25, 2004
MEMORANDUM OF DECISION
For many years, Shell Oil Company and Shell Oil Products Company (together, "Shell") maintained the Variable Rent Program (the "VRP") which allowed Shell gas station franchisees to offset monthly rents with certain of the proceeds of gasoline sales. On August 1, 1998, Shell terminated the VRP and assigned responsibility for daily operations of the franchisee network to Motiva Enterprises, LLC ("Motiva"). A substitute rent subsidy program established by Motiva continued to defray rental costs until its termination by Motiva on January 1, 2000. The elimination of these programs caused rents owed by the Shell franchisees to increase two- to six-fold and, according to the franchisees, constituted a violation of various federal and state laws. Plaintiffs in this case, the franchisees, contend that defendants Shell and Motiva endeavored to convert the gas stations into company-owned retail outlets by forcing the franchisees out of business and thereby violated the Petroleum Marketing Practices Act ("PMPA") and several Massachusetts state laws regarding consumer protection, gasoline regulation and contract law.
Acting as an unincorporated organization, plaintiffs filed an initial claim about six months after elimination of the substitute rent subsidy program. See Tsaniklides v. Shell Oil Products Co., Inc., No. 00-cv-11295. After the Court determined that the plaintiffs' organization did not have standing, the franchisees voluntarily dismissed their Complaint and filed the present action on July 27, 2001.
Defendants now seek summary judgment and have filed three separate motions. The first motion (document #216 on the docket) asserts that a subset of plaintiffs executed franchise termination agreements that include general releases of all claims against defendants, retained benefits received as a result of these releases and failed to repudiate the releases within a reasonably prompt period of time. Plaintiffs argue that they signed these releases under conditions of duress and should not be bound by these terms of release. Whether duress existed depends on the relevant facts. See, e.g., Shell Oil Co. v. Hennessy, 639 F. Supp. 626, 628 (D. Mass. 1986) (finding that unconscionability as "predicated on unequal bargaining power . . . must be determined on a case by case basis"). Because the facts regarding plaintiffs' claim are in dispute, this motion is denied.
In the second motion (document #225 on the docket), defendants argue that the PMPA applies only to terminations or non-renewals of franchise agreements, and that plaintiffs' franchise agreements were neither terminated nor non-renewed. Defendants argue specifically that they extended the franchise agreement with plaintiff Stephen Pisarcyzk and did not terminate or non-renew this relationship. As the First Circuit has recognized the theory of constructive termination under the PMPA, whether the elimination of rent subsidies following Shell's assignment of the franchises to Motiva constitutes constructive termination depends in part on resolution of certain facts presently in dispute. See Riverdale Enterprises Inc., et al., v. Shell Oil Co, 41 F. Supp. 2d 56, 61-62 (1st Cir. 1999) (stating the factors that a franchisee must establish in order to show constructive termination). Defendants' additional argument for summary judgment against plaintiff Three K's similarly relies upon facts in dispute regarding the appropriate interpretation of Mr. Abdul Kafal's testimony on behalf of Three K's. Accordingly, the second motion is denied.
Defendants' final motion (document #262 on the docket) identifies several grounds for summary judgment. The first ground opposes plaintiffs' Counts III through VIII on the basis that the PMPA preempts the state law claims asserted in these Counts. The First Circuit has taken a restrictive view of the PMPA preemption clause as preempting only those state statutes that interfere with a franchise termination "that would otherwise be valid under the PMPA." Esso Standard Oil Co. v. Dept. of Consumer Affairs, 793 F.2d 431, 434 (1st Cir. 1986). For example,"[s]tate regulation that may affect the profitability of a non-terminated franchise, but does not preclude the franchisor's ability to terminate the franchise relationship, is outside the sphere Congress sought to occupy in enacting the PMPA." Esso, 793 F.2d at 435. Although defendants argue that the state statutes cited by plaintiffs in Counts III through VIII are "intimately bound" with the grounds alleged for constructive termination, defendants do not demonstrate how these statutes actually qualify franchisors' rights to terminate or non-renew as permitted by PMPA.
Defendants next challenge the timeliness of plaintiffs' claims as based on underlying events that fall outside the permissible time frame for statute of limitations under the PMPA. This Court previously observed that "[v]iewing the facts as stated in the Amended Complaint in a light most favorable to the plaintiffs, the statute of limitations for the PMPA claims began to run on January 1, 2000." Marcoux v. Shell Oil Products Co., Inc. and Motiva Enterprises, LLC, 2002 WL 31256197, *1 (2002). It is unclear why defendants continue to raise this argument. The third motion also argues that the termination agreements executed by certain plaintiffs comply with the PMPA requirements for legal termination of a franchise relationship and thus should be treated as valid, binding terminations. As noted with respect to defendants' first motion, whether the certain plaintiffs executed these termination agreements under circumstances of duress remains in dispute. Regarding plaintiffs Three K's and Stephen Pisarczyk, however, defendants observe that the termination agreements in question were executed in 1999, before occurrence of the events in January of 2000 giving rise to this lawsuit. Plaintiffs have not demonstrated how the allegations of duress for these two plaintiffs might be tied to the events underlying this lawsuit. Summary judgment is thus granted as to these two plaintiffs.
Accordingly, defendants' third motion for summary judgment is allowed as to plaintiffs Three K's and Stephen Pisarczyk. The remaining motions are denied.