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Metroil, Inc. v. ExxonMobil Oil Corp.

July 20, 2010

METROIL, INC., PLAINTIFF,
v.
EXXONMOBIL OIL CORPORATION ET AL., DEFENDANTS.



The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Re Document Nos.: 12, 13

MEMORANDUM OPINION

GRANTING THE DEFENDANTS'MOTIONS TO DISMISS

I. INTRODUCTION

This case is before the court on the defendants' motions to dismiss for failure to state a claim for which relief can be granted. The plaintiff is the operator of an Exxon-branded retail gas station in the District of Columbia. Defendants ExxonMobil Corporation ("ExxonMobil") and ExxonMobil Oil Corporation ("ExxonMobil Oil" and, together with ExxonMobil, "the ExxonMobil defendants") are engaged in the business of oil production and refining. Until June 2009, the plaintiff leased the property on which its gas station is located from ExxonMobil and operated it pursuant to a franchise agreement with ExxonMobil Oil. In June 2009, the ExxonMobil defendants sold the station property and assigned the franchise agreement to defendant Anacostia Realty, LLC ("Anacostia"), a gasoline distributor that owns and supplies several retail gas station properties in the District of Columbia. The plaintiff alleges that the sale and assignment violated the District of Columbia Retail Service Station Amendment Act of 2009 ("RSSA"), D.C. CODE §§ 36-304.11 et seq., the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. §§ 2801 et seq., and amounted to a breach of its franchise agreement. Because the RSSA was not in effect at the time of the transfer, and because the allegations contained in the complaint are insufficient to establish a violation of the PMPA or a breach of the franchise agreement, the court grants the defendants' motions to dismiss for failure to state a claim for which relief can be granted.

II. BACKGROUND

A. The Statutory Framework

The PMPA regulates the circumstances in which petroleum refiners and distributors can terminate franchise agreements with retail gas station operators. See generally 15 U.S.C. §§ 2801 et seq. The statute applies to any contract that authorizes a franchisee to use the franchisor's trademark, purchase the franchisor's branded motor fuel and occupy service station property owned by the franchisor. Id. § 2801(1). The PMPA distinguishes between "franchise agreements," which are individual contracts between franchisor and franchisee, and the "franchise relationship," which it defines as the ongoing "motor fuel marketing or distribution obligations and responsibilities... which result from" the individual franchise agreements entered into by franchisors and franchisees. Id. § 2801(1)-(2). Under the PMPA, franchisors are prohibited from terminating a franchise agreement or refusing to renew a franchise relationship for any reason other than those specified in the Act. Id. § 2802, 2804. To enforce this prohibition, the PMPA provides a franchisee who suffers wrongful termination or non-renewal a private right of action against the breaching franchisor. Id. § 2805.

Although the PMPA preempts state law regarding the termination and non-renewal of covered franchise agreements, it expressly reserves to the states the power to regulate the transferability and assignability of franchise agreements. Id. § 2806(a)-(b). Taking advantage of this reservation, in May 2009, the District of Columbia City Council approved the RSSA, which, inter alia, restricts the assignment of gas station franchise agreements by requiring a refiner planning to sell a leased service station and assign a franchise agreement to a gasoline distributor to provide a right of first refusal to the station's operator. D.C. CODE § 36-304.12. Following transmittal to Congress, the RSSA became law on July 18, 2009. See id. § 36-304.11.

B. Factual & Procedural Background

From 2003 until June 2009, the plaintiff operated an Exxon-branded retail gas station leased from ExxonMobil pursuant to a series of franchise agreements with ExxonMobil Oil. Compl. ¶ 7. In 2008, the ExxonMobil defendants allegedly began divesting themselves from the retail gas station market, selling gas station properties and assigning franchise agreements to distributors. Id. ¶ 11. The plaintiff alleges that on June 12, 2009, the ExxonMobil defendants sold the property on which the plaintiff's gas station is located and assigned their franchise agreement with the plaintiff to Anacostia. Id. ¶¶ 10, 21.

The plaintiff alleges that its franchise agreement was set to expire on June 30, 2009, but that in March 2009, ExxonMobil Oil extended the agreement until July 31, 2009. Id. ¶ 17. The plaintiff contends that neither Anacostia nor the ExxonMobil defendants have offered to enter into a new franchise agreement with the plaintiff. Id. ¶ 27. The plaintiff acknowledges, however, that "Anacostia has replaced ExxonMobil Oil as Metroil's supplier" and that Anacostia has supplied Metroil with motor fuel. See id. ¶ 26. The plaintiff asserts that since the assignment of the franchise agreement to Anacostia, Anacostia has required pre-payment for motor fuel, raised its prices and withdrawn excessive funds from the plaintiff's bank account. Id.

The plaintiff commenced this suit in September 2009, alleging that the ExxonMobil defendants violated the RSSA and the PMPA and breached the terms of the franchise agreement by assigning it to Anacostia. Id. ¶¶ 29, 34, 38, 41. Additionally, the plaintiff alleges that Anacostia conspired with the ExxonMobil defendants to violate the RSSA and violated the PMPA by failing to renew the plaintiff's franchise relationship. Id. ¶¶ 31, 39. In November 2009, the ExxonMobil defendants filed a motion to dismiss for failure to state a claim, see generally ExxonMobil Defs.' Mot., and Anacostia filed a motion to dismiss for failure to state a claim, or, in the alternative, ...


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