Appellate Law

CA1: unreasonable gas prices, relation back, and franchise law

By S. COTUS

Marcoux et al v. Shell Oil Products et al. 05-2771. Shell franchisees are suing Shell, claiming that Shell told them that they would always get a discount on the cost of the franchise providing based on their sales. Then that discount stopped. 

First, and of general interest to all lawyers is a civil procedure issue. Initially the plaintiffs sued as an unincorporated association. The District Court dismissed for lack of standing, but noted that the plaintiffs could try again as individuals, and that action would relate back. (This matters for statute of limitations purposes.) On appeal, the defendants argue that this really isn?t possible. The First says that Fed. R. Civ. P. 15(c)?s advisory committee note says that the rule is ?"intimately connected with the policy of the statute of limitations? and in this case the defendants knew full well that they couldn?t expect to have any ?repose? so even the rule doesn?t really talk about substitution of plaintiffs, there is no bar to relation back.

The second most interesting (to everyone) is an affirmance of a jury verdict which held that the gas prices were not set in good faith and were unreasonable under the UCC as channeled though Mass. Gen. Laws ch. 106, § 2-305(2).

There is more below. 
 

Applying the Petroleum Marketing Practices Act (?PMPA?), 15 U.S.C. § 2801 et seq., the First says that ??franchise? and ?franchise relationship? were distinguished to drive home the fact that the franchise relationship survives the expiration of the agreements underlying the franchise, ?the PMPA forbids termination of a franchise or nonrenewal of a franchise relationship except under enumerated circumstances and with proper notice.? In this case, the First holds that there was a constructive termination even if there wasn?t a complete breach of all the ?elements? of the relationship as explained by the PMPA. 

On the other hand, the First rejects a ?constructive non-renewal argument? because even though the new leases were signed ?under protest? that still constitutes a ratification. 

Also, regarding the state law contract claim, the First says that there was no clear error in charging the jury about oral amendments to the lease, leading to the inference (by the First) that the contracts were not integrated, and therefore could be terminated by mutual agreement.

Full post as published by Appellate Law and Practice on April 20, 2008 (boomark / email).