Petition for Writ of Certiorari — Samaan v. Niakan

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IN THE -

SUPREME COURT OF THE UNIGED..

OCTOBER TERM, 1988

ISSA ELIAS SAMAAN,

Petitioner,

vw;

F. NIAKAN, E. NIAKAN, BEN NIAKAN,

BOB NIAKAN, BETTY NIAKAN, and

UNION OIL COMPANY OF CALIFORNIA,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

CALIFORNIA COURT OF APPEAL, SECOND

APPELLATE DISTRICT

MINUTILLO & GORMAN

JOHN C. GORMAN

Suite 1100

55 South Market Street

San Jose, CA 95113

(408) 998-7133

Attorneys for Iissa Elias Samaan

Petitioner

September 30, 1988

QUESTIONS PRESENTED

1. Do the state courts have concur-

rent jurisdiction over claims arising under

the Petroleum Marketing Practices Act

("PMPA"), 15 U.S.C. §§ 2801 et seg.?

2. Even if federal court jurisdic-

tion over PMPA is found to be exclusive,

cannot Petitioner's PMPA claims be raised

in state court as a matter of defense?

3. Are Petitioner's various state

law claims preempted by PMPA?

4. Whether Petitioner's claims are

meritorious assuming that concurrent state

court jurisdiction exists?

PARTIES TO THE PROCEEDINGS BELOW

The parties to this proceeding are

plaintiffs/cross-defendants F. Niakan, E.

Niakan, Ben Niakan, Bob Niakan, and Betty

Niakan; defendant/cross-complainant Issa

Elias Samaan; and defendant/cross-defendant

Union Oil Company of California.

In addition, William Sheffield and

Mary Sheffield were named as cross-defen-

dants below. They were dismissed following

the granting of a motion for summary judg-

ment.

TABLE OF CONTENTS

QUESTIONS PRESENTED . . ..- «© «© «© «© «© « i

PARTIES TO THE PROCEEDINGS BELOW .. . i

TABLE OF AUTHORITIES ......-.+.- iv

INTRODUCTION .. +. + © © © © © © © @ «@ 1

OPINIONS BELOW ... +++ «© © © «© « «@ 7

JURISDICTIONAL STATEMENT ...+.-+-«. - 7

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED... . 9

STATEMENT OF THE CASE ....+. ++ +--+ 10

A. Statement of Facts ....- 10

B. History of the Litigation .. 14

SUBSTANTIALITY OF FEDERAL QUESTIONS . . 18

I. THE ISSUE OF CONCURRENT

II. FEDERAL QUESTIONS MAY BE

III. PETITIONER'S STATE LAW

IV. WHETHER SUBSTANTIAL EVIDENCE

SUPPORTS THE DIRECTED VER-

DICTS AGAINST THIS PETI-

TIONER @ o * * e ? . ° 2 . . . 5 3

CONCLUS ION o o . * . °e . . . = e . os eo 59

APPENDIX A. . « « «© © © © © © © « « « APP=1

APPENDIX B. ° * > ° * ° e * ° . ° ° APP-12

APPENDIX C.

APPENDIX D.

APPENDIX E.

APPENDIX F.

APPENDIX G.

APP-13

APP-14

APP-41

APP-42

APP-44

Cases:

602 F. Supp. 874 (C.D. Cal. 1983) . 34, 42

Adams v. Iowa Oi] Co., Bus. Fran.

Guide (CCH), ¢ 8008 (Iowa S. Ct. 1983) 38

’

Aetna State Bank v. Altheimer

430 F.2d 750 (7th Cir. 1970) .... 5, 41

American Well Works v. Layne &

Bewiler Co., 2414 U.8. 257 (1916) . . «© « « §

ARCO Petroleum Products Co.

v. Williams, 146 111. App. 3d 218,

496 8.8.36 2008 (2006) 2 te it ttt wl we

Barnes v. Gulf Oil Corp., 795 F.2d

396 (40m Cie. BOON) bw ence ee we ME

Bates v. Chevron USA, Inc.,

151 Ga. App. 544, 260 S.E.2d 367 (1979) 38

Bellmore v. Mobil Oil Corp., 783

F.2d 300 (2d Cir. 1986) 3, 4, 43-45, 49-51

, 417 F. Supp. 806

(S.D.N.Y. 1976) oa . - se . 7 ” > ” o e . 22

Co., 478 F. Supp. 1016 (D. Or. 1979) 54, 58

Brach v. Amoco Oi] Co., 677

P.2@ 12133 (70m Cif. 1982) -. - «© © « «© « 26

Brown v. Pitchess, 13 Cal. 3d 518,

531 P.2d 772, 199 Cal. Rptr.

204 (1975) - * se = . es . aa s * = . . 31-33

California Arco Distributors, Inc.

v. Atlantic Richfield Co., 158 Cal.

App. 3d 349, 204 Cal. Rptr. 743 (1984) 33

Cason v. Texaco, Inc., 621 F. Supp.

1518 (M. D. La. 1985) oC ee &.-2n eS SS. ee 51

, 40 Cal.

3d 903, 710 P.2d 375, 221 Cal.

Rptr. 575 (1985) . . >. 7. . 7 * . * 27, 33

Consumers Petroleum of Connecticut,

, 38 Conn. Super, 495,

T° eR &£ BV: re

DaCosta's Automotive Inc.

’

106 A.D.2d 484, 482 N.Y¥.S.2d 832 (1984) 38

Davis v. Gulf Oi] Corp.,

485 A.2d 160 (D.C. App. 1984) ..... 38

Ry. Co., 342 U.S. 359 (1952) ....-. 39

DiNapoli v. Exxon Corp., Bus. Fran.

Guide (CCH), 4 7818 (D.N.J. 1982) . 49, 51

’

368 U.S. 502 (1962) . . « « « « « 3, 22, 27

, Bus. Fran.

Guide (CCH), 4 8663 (C.D. Cal. 1986) 18, 19

ERA Enterprises, Inc. v. Gulf Oil

Corp., 506 So. 2d 160 (La. App. 1987) . 38

Valley Gasoline, Inc., 139 Cal.

App. 3d 355, 188 Cal. Rptr. 641 (1983) 55

Esso Standard Oi] Co. v.

Department of Consumer Affairs

793 F.2d 431 (lst Cir. 1986) ..... 51

Petroleum Retailers, 484 F. Supp.

1008 (N.D. Ga. 1979) aff'd,

644 F.2d 1030 (5th Cir.), cert. denied,

454 U.S. 932 (1981) . «© «© e e ee ce eo co §2

eee

’

116 Wis. 2d 254, 342 N.W.2d 247 (1983)

Gulf Offshore Co. v. Mobil Oil Corp.,

453 U.S. 473 (1981) .... . 3, 20, 21,

’

Hanes vy. Mid-American Petroleum, Inc.

577 F. Supp. 637 (W.D. Mo. 1983) .. .

Hartman v. Shel] Oi] Co., 68 Cal.

App. 3d 240, 137 Cal. Rptr. 244 (1977)

Hathorn v. Lovorn, 456 U.S. 255 (1982)5,

Jiminez v. B.P. Oil, Inc., 652 F.

Supp. 329 (D. Md. 1987) .... © ee

Johnson v. Mobil Oi] Corp.,

364 Pa. Super. 275, 528 A.2d

155 (1987) ..... . 2-4, 30, 36, 37,

Khorenian v. Union Oil Co. of

California, 761 F.2d 533

Se ag ng tg le wl Bs

L.C. Williams Oi] Co.,. Inc.

, 627 F. Supp. 864

Vv. Exxon Corp.

(M.D.N.C. 1985) . ~. «© «© © «© © © © © @ «

’

Lane v. Central Bank of Alabama

756 F.2d 814 (llth Cir. 1985) .....

Lanham v. Amoco Oil Co., 481 F.

Supp. 405 (D. Md. 1979)... oe ee

Connecticut, Inc., 547 F.

ee eee

, 776 F.2d

706 (7th Cir. 1985) ....-. 3, 43, 45-49

Lou _v. Belzberg, 834 F.2d 730

(9th Cir. 1987) >. >. > >. a > > >. 7 > > >.

vii

, 526 F.

Supp. 961 (D. Conn. 1981) ..... 51,

554 F. Supp. 199 (D. Conn. 1982) ...

Niakan v. Samaan, 199 Cal. App.

3d 716, 245 Cal. Rptr. 34 (1988) ..

Pro Sales, Inc. v. Texaco, Inc.,

792 F.2d 1394 (9th Cir. 1986) ... 7 \°

, 180 N.J.

Super. 399, 434 A.2d 1151 (1981) . 38,

Roberts v. Amoco Oil Co.,

740 F.2d 602 (8th Cir. 1984) .....

618 F. Supp. 210 (C.D. Cal.

SOG): 6: 6 os oe Oe Oe ee, 28, 96, 36,

v. D'Arpino, 112 F.R.D. 668

(S.D.N.Y. 1986) * 7 * _ —_ > _ 7. = . . y

1s, Inc.,

711 F.2d 138 (9th Cir. 1983) .....

Ted's Tire Service, Inc. v.

Chevron USA, Inc., 470 F. Supp. 163

eee PF

28-30, 33, 36,

Testa v. Katt, 330 U.S. 386 (1947) ..

Thomas v. Amoco Oi] Co.,

455 So. 2d 1187 (La. App. (1984) ...

Waldron v. McAtee, 723 F.2d 1348, 1352

(7th Cir. 1983) * . * - s — . * > . + —

154 Ga. App. 636, 269 S.E.2d 495 (1980)

viii

21,

Weiner v. Shearson, Hammill &

Co., Inc., 521 F.2d 817 (9th Cir.

Wojciechowski v. Amoco Oil Co.,

483 F. Supp. 109 (E.D. Wis. 1980)

805 F.2d 888 (9th Cir. 1986)

Statutes and Rules:

§§ 2801 et seg. .

2802 (b) (2) (C)

U.S.C.

wawa wo wh wow wow wow enFeeelUemDmllUM

2802 (b) (2) (C) (T)

2802 (b) (3) (D) (iii)

2802 (b) (3) (D)

2802(c) (4) (B)

2802(c) (4)

2802 (c) (10)

2804(b) (2) (B)

2804 (c)

2805 .

2805 (a)

2805 (c)

2805(d) (1) (B)

2806 .

2806 (a)

1257 .

1343(3)

1975) 41

eg ee

i ere

o, 41, 26

. 45, 56

: ies 26

veal

i.» Se

; 16

» 1, 2d

. 16, 57

a 25

21, 22, 20

25, 54

—

’

Soe

28 U.S.C. § 1441 (amended 1986) .

Cal. Bus. & Prof. Code § 20999.1

Supreme Court Rule 17.1(b) .

Supreme Court Rule A7.a(@) .

U.S. Const., art. 6, cl. 2 .

U.S. Const., art. I, §8 ..

Other Authorities:

13 Wright, Miller & Cooper,

§ 3527, 245 & 246n.23 ....

Alexander Hamilton's

H.R. Rep. No. 95-161,

95th Cong. 1st Sess. 14...

Redish & Muench, Adjudication

, 75 Mich. L. Rev.

325n.63 (1976) “a a Se ae cae ae

S. Rep. No. 95-731, 95th Cong.

2d Sess. 16, reprinted in 1978

gal,

‘

U.S. Code Cong. & Ad. News 873, 874

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1988

ISSA ELIAS SAMAAN,

Petitioner,

Vv.

F. NIAKAN, E. NIAKAN, BEN NIAKAN,

BOB NIAKAN, BETTY NIAKAN, and

UNION OIL COMPANY OF CALIFORNIA,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

CALIFORNIA COURT OF APPEAL

Issa Elias Samaan respectfully peti-

tions this Court for issuance of a Writ of

Certiorari as follows:

INTRODUCTION

The California Court of Appeal dis-

missed Petitioner's entire appeal for lack

of subject matter jurisdiction -- an argu-

ment raised by Union Oil for the first time

a eae

on appeal -- based upon the authority of

Rustom v. Atlantic Richfield Co., 618 F.

Supp. 210 (C.D. Cal. 1985).

As discussed infra, Rustom and Niakan

are ill-considered rulings that are con-

trary to the majority of courts that have

found the existence of concurrent PMPA jur-

isdiction, see, e.g., Sun Refining &

Marketing Co. v. D'Arpino, 112 F.R.D. 668,

670 (S.D.N.Y. 1986); Ted's Tire Service,

nc. Vv ev , 470 F. Supp.

163, 165 (D. Conn. 1979); Johnson v. Mobil

ep Orp., 364 Pa. Super. 275, 528 A.2d

155, 163-165 (1987), or otherwise assumed

the existence of concurrent jurisdiction.

The appellate opinion below consti-

tutes a double-barreled assault upon the

long established doctrine that state courts

are fully capable of enforcing federally

created rights in the absence of an unequi-

vocal Congressional intention to create

exclusive jurisdiction. Nothing in our

concept of a federal system prevents state

courts from enforcing rights created by

federal law. Gulf Offshore Co. v. Mobil

Oil Corp., 453 U.S. 473 (1981): Dowd Box

Co. v. Courtney, 368 U.S. 502 (1962). The

decision below creates a clear conflict

among existing federal and state case law

and makes the need for the Highest Court's

intervention especially acute at this junc-

ture.

To find that the state courts lack

jurisdiction over Petitioner's claims, the

California Court of Appeal was tacitly re-

quired to extend Rustom to a perverted ex-

treme -- the state courts not only lack

jurisdiction to consider Petitioner's fede-

ral PMPA claims, they also lack the author-

ity to adjudicate state law claims, which

according to the Court of Appeal, are pree-

mpted by PMPA. The ruling on the preemp-

tion issue is particularly anomalous con-

sidering the contrary result reached by

Bellmore v. Mobil Oil Corp., 783 F.2d 300

(2d Cir. 1986); Lippo v. Mobil Oil Corp.,

caidas 7

776 F.2d 706 (7th Cir. 1985); and Johnson

v. Mobil Oi] Corp., 364 Pa. Super. 275, 528

A.2d 155, 158-163 (1987). As the Second

Circuit held in Bellmore, it would be di-

rectly contrary to the intended Congres-

sional purpose for a court "to read [PMPA]

expansively" so as to interfere with the

right of a state to provide legal redress

to its citizens for wrongdoing “in areas

that Congress left to the control of the

states." 783 F.2d at 305.

Further, the decision below ignores

the fact that Petitioner was involuntarily

named as a defendant in this action and had

no opportunity to select a federal forun.

Because Petitioner's PMPA cross-claims were

compulsory as to the plaintiffs -- who are

alleged by Petitioner to have conspired

with respondent Union Oil to deprive him of

' Johnson, supra, contains an extreme-

ly able and well considered discussion of

both the PMPA jurisdictional and preemption

issues, including a careful analysis and

rejection of the Rustom logic.

SS a

various statutory and contractual rights --

the state court was the only possible for-

um for resolution of the claims presented.

Even where a statute clearly creates exclu-

sive federal jurisdiction, a state court is

duty bound to resolve all such federal

questions where they "are introduced by way

of [affirmative] defense, and failure to do

so would violate the supremacy clause."

Aetna State Bank v. Altheimer, 430 F.2d

750, 754 (7th Cir. 1970); accord, Hathorn

v. Lovorn, 456 U.S. 255, 266 & 266-67n.18

(1982). Indeed, state court was the only

place that Petitioner's defenses could be

asserted since a defendant may not remove a

state case based upon a federal defense.

See, e.g., American Wel] Works v. Layne &

Bowler Co., 241 U.S. 257 (1916).

Where existing federal and state case

authorities are hopelessly split, a pro-

nouncement should necessarily come from

this Court in order to provide effective

guidance to the hundreds, if not thousands,

of litigants and their legal counsel who

may from time to time need to deal with

Claims under PMPA. The availability of a

state court forum is of particular impor-

tance to service station dealers in remote

areas far from federal courthouses and

those who may have filed claims under PMPA

in state court, in reliance upon the pre-

existing case authority upholding the exis-

tence of concurrent jurisdiction, only to

be met, after having expended considerable

time and money (as in the case at bar),

with the decision herein.

Finally, the serious errors of law in

this case have ruined the life of this Pe-

titioner -- by depriving him of his only

source of livelihood -- and threaten to

adversely affect thousands of petroleum

dealers nationwide. This Court should in-

tervene not only to correct those errors

but also because this case presents compel-

ling constitutional and statutory issues of

exceptional importance to the courts and to

the public.*

OPINIONS BELOW

The opinion below was filed by the

California Court of Appeal on February 16,

1988 and is published as Niakan v. Samaan,

199 Cal. App. 3d 716, 245 Cal. Rptr. 24

(1988).

A Petition for Hearing to the Califor-

nia Supreme Court was denied on May 4,

1988, with Justices Mosk and Broussard dis-

senting.

JURISDICTIONAL STATEMENT

Petitioner filed his notice of entry

of appearance and application for extension

of time with this Court on July 19, 1988.

An extension of time has been granted until

October 1, 1988. This Court's jurisdiction

is invoked pursuant to 28 U.S.C. § 1257 and

* The instant petition is directly

related to the issues raised in the Peti-

tion for Writ of Certiorari presently pend-

ing before this Court in Kreisher v. Mobil

Oil Corp.

2 '

Supreme Court Rules 17.1(b) and 17.1(c).

Since its enactment ten years ago in

1978, the numerous federal and state courts

that have considered PMPA have irreconcil-

ably split as to two critical issues -- the

existence of state court jurisdiction and

the extent to which PMPA preempts a petro-

leum dealer's right to relief under state

law.

This Court has never previously ac-

cepted review of a case under PMPA, a heav-

ily litigated remedial statute that affects

thousands of oil companies, petroleum

wholesalers, and petroleum retailers

nationwide. Only this Court can act to re-

solve these issues and eliminate the exist-

ing split of authority.

Because this case arises out of a

state court appeal following a lengthy tri-

al, it squarely presents this Court with a

unique opportunity to resolve both the jur-

isdictional and preemption issues on a conm-

pleted record. Ten years after enactment

of the controlling statute, there is no

reason for the lower federal and state

courts to be continuously arriving at wide-

ly different results as to the critical

issues of concurrent jurisdiction and pre-

emption.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The first and third questions presen-

ted as to whether concurrent state court

jurisdiction exists to consider PMPA

Claims, either by granting affirmative re-

lief or defensively, involve the federal

supremacy clause, U.S. Const., art. 6, cl.

2, and 15 U.S.C. § 2805(a).

The second question involves the fed-

eral supremacy clause, supra, and the re-

moval statute, 28 U.S.C. § 1441 (amended

1986).

The third question presented relating

to preemption involves the interstate com-

merce clause, U.S. Const., art. I, § 8, and

15 U.S.C. § 2806.

The fourth question concerns the sub-

stantive merits of the various claims

raised by Petitioner under PMPA, 15 U.S.C.

§§ 2801 et seg., and various state law

Claims.

The provisions of these consitutional

and statutory authorities have been includ-

ed in the appendix.

STATEMENT OF THE CASE

A. Statement of Facts.

In 1963, Union Oil leased a service

station site at 11859 Wilshire Boulevard in

Los Angeles from the Sheffields and con-

structed a Union Oil station on the site.

The original term of the lease expired on

April 30, 1979. The lease contained op-

tions to extend the lease for two five-year

periods. Union Oil subsequently exercised

the first of its two options to extend the

site lease. The new expiration date was

scheduled for April 30, 1984. The Shef-

fields subsequently sold the site to the

Niakans.

On July 15, 1977, Union entered into a

franchise agreement with Petitioner which

included a sublease of the same service

station site. This franchise was subject

to the provisions of PMPA, which prohibits

the termination or nonrenewal of an exist-

ing petroleum franchise absent the exis-

tence of certain statutory grounds and the

franchisor's strict compliance with the

mandated notification procedures. 15

U.S.C. §§ 2801 et seg. In addition, Petit-

ioner was informed by Union when he purc-

hased the service station, and on numerous

occasions thereafter, that he could expect

to remain at the site until Union's tenancy

rights expired on April 30, 1989.

The sublease was for a three-year per-

iod ending July 14, 1980. On September 30,

1980, Union Oil and appellant entered into

another three-year franchise which, by its

terms, commenced on September 15, 1980 and

expired on September 30, 1983. When these

franchise documents were delivered to Peti-

tioner for signature, he was given written

notice that the site lease would not expire

until April 30, 1984.

The written agreements formalizing

Samaan's most recent franchise consisted of

a Retail Dealer Motor Fuel Purchase Con-

tract (the "product supply agreement") and

a Service Station Lease (the "sublease”").

Consistent with Union's standard practice,

the franchise was for a period of three

years. (R.T. 48-49, 486-87, 735, 860).

At the time that this franchise agree-

ment was signed, Union also delivered to

Samaan a "State of California Disclosure

Information" letter (Trial Ex. 3), which

provided:

Term. This Lease

is for a period of

three years. Lessee's

tenancy at the station

shall _ be renewed by Un-

ion at the expiration

date, unless this Lease

has been terminated

prior to the expiration

date pursuant to the

provisions of Paragraph

190, 22, GF iae-

(Emphasis added.)

In August 1981, Union Oil entered into

a settlement agreement with the Sheffields

and Niakans in order to settle a lawsuit

brought by the Sheffields in 1977. The

Sheffield suit claimed retroactive rental

increases were due under the site lease.

Under the terms of the settlement, Union

relinquished its option to extend the site

lease for an additional five-year term and

agreed to prematurely terminate Samaan's

franchise rights as of September 30, 1983,

seven months prior to the date that had

been promised to Petitioner in Union's

Lease Disclosure Statement.

Petitioner did not receive notice of

this settlement (nor, for that matter, had

Petitioner been told by Union of the exis-

tence of the Sheffield litigation when he

purchased the service station) and did not

learn about the settlement until June 1982,

from the Niakans' attorney.° Up to that

time, Petitioner understood the site lease

was due to expire on April 30, 1984, and

that it would be extended by Union until

April 30, 1989.

Petitioner did not receive a formal

notice of nonrenewal from Union until May

31, 1983, or 685 days after Union had made

its decision not to renew Petitioner's

franchise.

B. History of the Litigation.

The instant litigation was commenced

by the Niakans against Petitioner and Union

in the Los Angeles Superior Court in Noven-

ber 1982 for declaratory relief, slander of

title, and injunctive relief.

Petitioner filed an answer asserting

PMPA as an affirmative defense and also a

cross-complaint against the Niakans and

Union on January 18, 1983. An amended

3 union has conceded that this type of

information concerning a franchisee's ten-

ancy rights should have been routinely

communicated to a dealer. (R.T. 922).

cross-complaint was filed on February 22,

1983. A second amended cross-complaint

(hereinafter “cross-complaint") was filed

on June 6, 1983, following Petitioner's

receipt of the formal Notice of Nonrenewal

of his franchise from Union on May 31,

1983. Both Petitioner's affirmative defen-

ses and cross-complaint raise federal is-

sues under PMPA.

The first cause of action of the

cross-complaint was brought against Union

and the Niakans for violations of PMPA,

including conspiring to violate Petition-

er's statutory and contractual rights, as a

result of Union's nonrenewal of Petition-

er's franchise. The cross-complaint also

contains state law causes of action for

unfair business practices, breach of the

implied covenant of good faith, breach of

contract, and misrepresentation.

Prior to trial a preliminary injunc-

tion was issued by stipulation of the par-

ties on October 14, 1983 (C.T. 100-03; R.T.

288, 413). This preliminary injunction

enjoined Union and the Niakans from termi-

nating or interfering with Petitioner's

franchise pending trial.

Union argued at trial that it had no

legal obligation to exercise its second

five-year option to extend the site lease

and that it could lawfully nonrenew

Samaan's franchise. Contrary to Union's

position, under PMPA a petroleum franchisor

may elect not to renew an existing site

lease, but only if it fully complies with

all applicable procedural and notification

requirements. 15 U.S.C. §§ 2801 et seq.*

‘ The evidence at trial established

that Union failed to comply with numerous

provisions of PMPA, including, jnter alia,

the requirement that Union must have noti-

fied Petitioner of its nonrenewal decision

"not more than 120 days" after it "first

acquired actual or constructive knowledge"

of the event justifying nonrenewal (15

U.S.C. § 2802(b) (2) (C)(I))? Union's writ-

ten notice of nonrenewal must have stated

the actual "reasons" for its nonrenewal

decision (15 U.S.C. § 2804(c)); and Petiti-

oner must have been notified in writing

prior to the commencement of the term of

[his] then-existing franchise" that "the

underlying lease might expire and might not

be renewed .. . at the end of such tern,"

EEO ee ae ee a

Following a three week jury trial, the

Los Angeles Superior Court, after tentativ-

ely indicating its intent to submit the

case to the jury (R.T. 1001), directed a

verdict in favor of the Niakans and Union

as to each claim other than Petitioner's

eighth cause of action against Union for

misrepresentation, based upon the Superior

Court's belief that Petitioner's various

state law claims were preempted. At no

time did any of the cross-defendants at-

tempt to remove the case to federal court

nor was lack of subject matter jurisdiction

as required by 15 U.S.C. § 2802(c) (4) (B).

Even Union's counsel conceded at trial

(R.T. 1002) that Union did not comply with

at least one essential element of the PMPA

notice requirements -- the delivery of a

written lease disclosure statement prior to

commencement of Samaan's then-existing

franchise stating that the site lease might

expire as of September 30, 1983, as re-

quired by 15 U.S.C. § 2802(c) (4) -- and it

is clear that Union also failed to comply

with many other necessary PMPA require-

ments, including failing to offer Samaan a

right of first refusal to purchase the

service station property.

_——

raised as an issue by the Superior Court or

any of the cross-defendants.°

Petitioner seeks this Court's review

of the Superior Court judgment entered in

favor of the Niakans declaring that the

service station sublease held by Petitioner

had been lawfully terminated and against

Petitioner as to his cross-complaint

against the Niakans and Union, and the ap-

pellate ruling that no subject matter jur-

isdiction exists to consider Petitioner's

appeal. The issue of lack of subject mat-

ter jurisdiction was first raised in

Union's appellate brief filed on Septen-

ber 3, 1987, approximately five years after

the lawsuit was commenced.

> Petitioner's misrepresentation claim

was submitted to the jury as to the issue

of Union's actual fraud, but the Superior

Court refused to give Petitioner's request-

ed jury instructions on negligent misrepre-

sentation. The jury returned a split ver-

dict in favor of Union.

> THE ISSUE OF CONCURRENT JURISDICTION

The California Court of Appeal dis-

missed Petitioner's entire appeal based on

its perceived belief that Congress implied-

ly intended to create exclusive federal

jurisdiction over PMPA claims, relying upon

Rustom v. Atlantic Richfield Co., 618 F.

Supp. 210 (C.D. Cal. 1985), and the unpub-

lished decision in Elimelekh v. Texaco,

Inc., Bus. Fran. Guide (CCH), 4 8663 (C.D.

Cal. 1986) .°

As discussed herein, the appellate

court's decision to follow Rustom is incon-

sistent not only with the express language

° The plaintiff in Rustom was incar-

cerated when the court hearing was held and

his lawyers were not being paid. Rustom's

counsel consequently had little incentive

to diligently oppose Atlantic Richfield's

motion and no incentive to prosecute an

appeal. (See Appellant's Reply Brief at

4). In Elimelekh, the district court simp-

ly followed Rustom and did not discuss any

of the contrary authorities. The Elimelekh

decision noted that no opposition was filed

by Elimelekh to Texaco's moving papers.

The weight that should be accorded to Rus-

tom and Elimelekh is thus highly suspect.

of the statute but also with all other pub-

lished federal and state case precedents.

Until Rustom, it appears to have been ac-

cepted by all federal and state courts that

concurrent state court jurisdiction existed

to adjudicate PMPA claims.’

The strong general presumption of con-

current federal and state court jurisdic-

tion to enforce federal statutory rights

can be rebutted only "by an explicit statu-

’ The Rustom court reexamined the ex-

isting case law and decided that Congress

intended to give federal courts exclusive

jurisdiction over PMPA based upon a refer-

ence in the Senate and House Reports which

refers to the maintenance of an action by

an aggrieved dealer in federal court:

"'The provisions of Title I are enforceable

by private civil action in U.S. District

Court.' S. Rep. No. 95-731, 95th Cong., 2d

Sess. 16, reprinted in 1978 U.S. Code Cong.

& Ad. News 873, 874; H.R. Rep. No. 95-161,

95th Cong. 1st Sess. 14." 618 F. Supp. at

212. The district court also noted what it

believed was a "conspicuous absence" of any

reference to filing a PMPA lawsuit in state

court. Jd. Further, Rustom relied upon

PMPA's incorporation of standards under the

Federal Rules of Civil Procedure for the

award of damages and for issuance of pre-

liminary injunctions to find an "unmis-

takable implication" that exclusive federal

court jurisdiction was intended.

tory directive, by unmistakable implication

from legislative history, or by a clear

incompatibility between state-court juris-

diction and federal interests." Gulf

Offshore Co. v. Mobil Oi] Corp., 453 U.S.

473, 478 (1981). Thus, "the presumption is

that jurisdiction is concurrent, and some

strong showing of need for exclusive jur-

isdiction is required to overcome that pre-

sumption." Redish & Muench, Adjudication

of Federal Causes of Action in State Court,

75 Mich. L. Rev. 311, 325n.63 (1976). The

presumption of concurrent jurisdiction is

controlling absent specific provision by

Congress to the contrary or disabling in-

compatibility between the federal claims

and state court adjudication. Gulf Off-

shore Co., 453 U.S. at 791.

The strong presumption ef concurrent

jurisdiction over federal statutes is but-

tressed by the language of PMPA, its recog-

nized remedial purpose, the great weight of

case authority, and Congress' long acquies-

cence in the holding of Ted's Tire Service,

inc. v. Chevron USA, Inc., 470 F. Supp. 163

(D. Conn. 1979) -- one of the first cases

decided under PMPA -- which concluded that

state courts enjoy concurrent jurisdiction.

The statutory language of PMPA strong-

ly suggests that concurrent jurisdiction

was intended. The operative section of

PMPA, 15 U.S.C. § 2805(a), provides that a

PMPA claim "may be brought" in federal

court.® Use of the discretionary word

"may" strongly suggests that Congress

intended to create concurrent jurisdiction.

Dowd Box Co. v. Courtney, 368 U.S. 502

(1962); Lane v. Central Bank of Alabama,

756 F.2d 814 (llth Cir. 1985); Berg v. Wat-

son, 417 F. Supp. 806, 808n.1 (S.D.N.Y.

® Section 2805(a) reads:

"If a franchisor fails

to comply with the re-

quirements of section

2802 or 2803 of this

title, the franchisee

may maintain a civil

action against such

franchisor."

1976). The language of PMPA does not con-

tain any restriction as to the forum in

which the franchisee's civil action may be

pursued.

Other sections of PMPA likewise sug-

gest Congress' intent to permit state court

enforcement of the Act. The preemption

language of the Act, § 2806(a), only pre-

cludes state enforcement of state law which

differs from the provisions of the PMPA.

If a state's "provision of ... law or

regulation is the same as the applicable

provision of the [PMPA]" it is not preempt-

ed, and state enforcement of any such law

may continue. If states may enforce state

laws identical to the PMPA, obviously Con-

gress did not intend to preclude states

from enforcing PMPA itself.

Similarly, § 2804(b) (2) (B), setting

forth additional notification requirements

for a franchisor which intends to discon-

tinue retail business in a geographic area,

requires the franchisor to give notice "to

the Governor of each state which contains a

portion of such area." Why alert state

governments if no state enforcement role is

contemplated?

PMPA was enacted by Congress in 1978

to protect petroleum franchise*s, such as

Petitioner, from unfair conduct on the part

of a franchisor in disregard of the fran-

chisee's rights:

It is also important to

note that often the

reasonable expectations

of the parties to a

motor fuel franchise

are that the relation-

ship will be a continu-

ing one. This expecta-

tion by the franchisee,

in particular, is often

the result of and fos-

tered by, statements

and actions of the

franchisor. As a

result, nonrenewal of a

motor fuel franchise

relationship at the ex-

piration of its term

can be almost as puni-

tive as termination of

the franchise during

its terms. The

reasonable expectations

of the franchisee,

rather than any defini-

tive contract rights,

are destroyed.

. + * ca *

An essential re-

quirement of federal

legislation is that the

grounds for termination

and nonrenewal provided

by the legislation not

be so broad as to deny

franchisees meaningful

protection from arbi-

trary or discriminatory

terminations and nonre-~

nevwals or prevent

fulfillment of the rea-

sonable renewal expec-

tations of franchisees.

Senate Report No. 95-731, at 18 (emphasis

added) .”

It has been consistently recognized

that PMPA was intended to effectuate a

strong remedial purpose and is entitled to

9 PMPA permits an aggrieved franchisee

to recover compensatory damages, injunctive

relief, and attorneys' fees. 15 U.S.C. §

2805. Punitive damages may also be recov-

ered if the franchisor acted "in willful

disregard" of its renewal obligations under

15 U.S.C. § 2802. 15 U.S.C. §

2805(d)(1)(B). Under PMPA, the franchisor

"shall bear the burden of going forward

with evidence to establish as an affirma-

tive defense" that the franchisor's conduct

in nonrenewing the franchise was in full

compliance with all PMPA requirements. 15

U.S.C. § 2805(c).

a liberal construction consistent with its

underlying purpose:

Congress enacted

the Petroleum Marketing

Practices Act to pro-

tect ‘franchisees from

arbitrary or discrimin-

atory termination or

non-renewal of their

franchisees.' S. Rep.

No. 95-731, 95th Cong.

2d Sess. 15, reprinted

in 1978 U.S.Code Cong.

& Ad. News 873, 874

{hereinafter cited as

Senate Report]. We

‘als remedial legisla-

tion, the Act must be

given a liberal con-

struction consistent

with its goal of pro-

tecting franchisees.'

Humboldt Oi] Co. v.

Exxon Co., U.S.A., 695

F.2d 386, (9th Cir.

1982) (Citation

omitted.)

Khorenian v. Union Oi] Co. of California,

761 F.2d 533, 535 (9th Cir. 1985) (emphasis

added).

Accord, Brach v. Amoco Oi] Co., 677 F.2d

1213, 1220-21 (7th Cir. 1982) ("Our duty is

to give PMPA the most harmonious, compre-

hensive meaning possible. As remedial leg-

purpose to protect franchisees.” (Emphasis

added.) (Citations omitted.)

A finding of "[e)xclusivity would ob-

viously create an obstacle in the way of a

private litigant, who would be compelled to

bring his claim in federal court even if he

preferred a state forum. Such a result

does not seem in accordance with Congress'

intentions as we perceive them." Cianci v.

Superior Court, 40 Cal. 3d 903, 912, 710

P.2d 375, 221 Cal. Rptr. 575 (1985)

(finding concurrent RICO jurisdiction).

In Dowd Box Co. v. Courtney, 368 U.S.

502 (1962), the Supreme Court was asked to

decide whether the Labor Management Rela-

tions Act of 1547 bestowed exclusive juris-

diction on federal courts. Section 301(a)

of the act provides that "[sJuits for vio-

lation of contracts between an employer and

a labor organization . .. may be brought

in any district court of the United States

. « « without respect to the amount in con-

troversy ... ." The Court found that

this language "simply gives the Federal

District Court jurisdiction over suits for

violation of certain specified types of

contracts" and that it "does not state or

even suggest that such jurisdiction shall

be exclusive. It provides that suits of

the kind described 'may' be brought in the

federal district courts, not that they must

be." Dowd, 368 U.S. at 506 (emphasis

added). The Supreme Court further noted

that our concept of a federal system of

government does not prevent state courts

from enforcing rights created by federal

law.

In : Vv

USA, Inc., 470 F. Supp. 163 (D. Conn.

1979), one of the earliest cases decided

under PMPA following its enactment in 1978,

it was unambiguously held that § 2805(a)

creates a discretionary right for service

station dealers to proceed with PMPA claims

in either a state or federal forum:

g - [PMPA] stipulates

; that a civil action to

; redress a violation of

the statute ‘may be

brought' in a federal

district court; it does

not state that such an

action must be insti-

tuted in federal court.

15 U.S.C. § 2805

(emphasis added. It

has been long estab-

lished that, absent any

470 F. Supp. at 165 (second emphasis

added).

The federal court in Ted's Tire con-

cluded:

(Tjhere is nothing in

the PMPA which suggests

that the Connecticut

Superior Court would

not have had jurisdic-

tion over a complaint

brought under the PMPA.

Ted's Tire has become sufficiently

established as a correct statement of the

blackletter rule of law that it is cited

with approval by Professors Wright, Miller,

and Cooper for the proposition that "[ujn-

less Congress expressly makes federal court

jurisdiction exclusive, federal and state

courts have concurrent jurisdiction to try

federal claims." 13 Wright, Miller &

Cooper, Federal Practice and Procedure, §

3527, 245 & 246n.23.

At no time has Congress attempted to

amend PMPA to overturn the holding of Ted's

Tire that concurrent state court jurisdic-

tion exists to adjudicate PMPA claims.

Congress' prolonged acquiescence in the

result reached in Ted's Tire strongly sug-

gests that concurrent jurisdiction is in

fact precisely what had been congressional-

ly intended.

The California Court of Appeal's blind

adherence to Rustom ignores Congress' long-

standing acceptance of Ted's Tire and

a ile |

places undue weight on the fact that PMPA

"is federal legislation applying federal

remedies which have been extensively inter-

preted by federal courts." Niakan, 245

Cal. Rptr. at 27. However, "[{njothing in

the concept of our federal system prevents

state courts from enforcing rights created

by federal law." Johnson v. Mobil Oil Co.,

364 Pa. Super. 275, 528 A.2d 155, 164

(1987). It is established that "[s]jtate

courts have the power, indeed the duty, to

pass on questions of federal law that arise

in cases properly brought in their courts."

Waldron v. McAtee, 723 F.2d 1348, 1352 (7th

Cir. 1983) (emphasis added). Accord, Testa

v. Katt, 330 U.S. 386, 393 (1947) (“For the

policy of the federal Act is the prevailing

policy in every state."); see Worldwide

Church of God v. McNair, 805 F.2d 888, 891

(9th Cir. 1986) ("[A]ny other rule would

result in a waste of judicial resources and

unnecessary friction between state and fed-

eral courts.")

Highly relevant is Brown v. Pitchess,

13 Cal. 3d 518, 531 P.2d 772, 199 Cal.

Rptr. 204 (1975), a leading textbook deci-

sion on the issue of concurrent state and

federal jurisdiction over claims arising

under federal law. In Brown, the Califor-

nia Supreme Court held that state courts

have jurisdiction over federal civil rights

suits brought under 42 U.S.C. § 1983 de-

spite the fact that the vast bulk of law-

suits brought under that statute were his-

torically filed in federal court.

Although 28 U.S.C. § 1343(3), the jur-

isdictional section governing § 1983

Claims, confers “original jurisdiction" on

the federal courts, Brown concluded that

"original jurisdiction" "does not mean ex-

Cclusive jurisdiction." 13 Cal. 3d at 521.

"Unless Congress confers exclusive juris-

diction on federal courts, state courts

competent to exercise it have concurrent

jurisdiction to enforce federal law in civ-

il actions." Jd. (Emphasis added.)

observed:

When intending to

confer exclusive, as

well as original, jur-

isdiction on the feder-

al district courts,

Congress is quite capa-

ble of making itself

understood. For

example, section

1338(a) of title 28 of

the United States Code

provides: 'The dis-

trict courts shall have

| The California Supreme Court further

of any civil action

arising under any Act

of Congress relating to

patents, plant variety

protection, copyrights

and trademarks. Such

jurisdiction shall be

exclusive of the courts

of the states in

patent, plant variety

production and copy-

right cases.'

Id. (emphasis in original).

In Cianci v. Superior Court, 40 Cal.

3d 903, 911-13, 710 P.2d 375, 221 Cal.

Rptr. 575 (1985) (holding that concurrent

jurisdiction exists over RICO claims), the

California Supreme Court expressly cited

PMPA as an example of a federal statute

which provides for concurrent jurisdiction.

40 Cal. 3d at 913. Like PMPA, the relevant

provision of RICO, 18 U.S.C. § 1964(c),

provides that any aggrieved person "may"

file a lawsuit in federal district court.”

The Cianci holding was recently adopted by

the Ninth Circuit in Lou v. Belzberg, 834

F.2d 730 (9th Cir. 1987).

Other federal decisions also recognize

that state courts have concurrent PMPA jur-

isdiction. In Abadjian v. Gulf Oi] Corp.,

602 F. Supp. 874 (C.D. Cal. 1983), for ex-

ample, the federal district court remanded

the case to the Los Angeles Superior Court

recognized that concurrent state court

jurisdiction exists over PMPA claims in

California Arco Distributors, Inc. v. At-

lantic Richfield Co., 158 Cal. App. 3d 349,

364, 204 Cal. Rptr. 743 (1984): "[Wje are

cognizant that the state courts have con-

current jurisdiction to enforce the PMPA."

Based upon Cianci and CADI, it had been the

established law in California at all rele-

vant times that state courts have concur-

rent jurisdiction over PMPA actions. Both

Ciancji and

expressly relied upon the authority of

Inc., 470 F. Supp. 163 (D. Conn. 1979).

Pott vrn

after it had been removed by the defen-

dants. In Abadjian, as in this case, the

plaintiffs alleged that their franchisor

had conspired with a third party to defeat

the service station dealers' PMPA rights.

Because the third party was not a "fran-

chisor" as defined by PMPA, no independent

basis for federal jurisdiction was present

as to all necessary parties. The district

court's remand of the case to state court

clearly demonstrates the federal court's

belief that concurrent PMPA jurisdiction

exists.

In Lanham v. Amoco Oi) Co., 481 F.

Supp. 405 (D. Md. 1979), the court accepted

jurisdiction over an action under PMPA that

was removed from state court. Because "a

federal district court acquire[d] no remov-

al jurisdiction over a claim that the state

court initially lacks subject matter juris-

diction to decide" under the then-existing

removal rules, this decision necessarily

recognizes that the state courts have con-

current PMPA jurisdiction.

More recently, the existence of state

court jurisdiction over PMPA claims was

noted in Sun Refining & Marketing Co. v.

D'Arpino, 112 F.R.D. 668, 670 (S.D.N.Y.

1986), in which the district court granted

a petroleum franchisor's motion to remand

an action to state court:

[AjJny arguments that

D'Arpino wishes to

raise with respect to

the PMPA will have to

be made in the Village

Court of Ossining,

where the court may ex-

ercise concurrent jur-

isdiction over the

PMPA. ‘'\

Until Niakan, Rustom was the only pub-

lished decision since the enactment of PMPA

in 1978 to hold that federal courts have

exclusive jurisdiction over PMPA claims.

Rustom had never been followed or cited

with approval in any reported federal or

state decision until the decision below.

—_———

This Honorable Court's attention is

particularly directed to the recent case of

Johnson v. Mobil Oi] Co., 364 Pa. Super.

275, 528 A.2da 155 (1987), which contains a

cogently articulated rejection of Ruston

and its logic. The Pennsylvania court

traced the history of the concurrent juris-

diction to Alexander Hamilton's The Fede-

ralist No. 82 before addressing the rela-

tive merits of the Rustom and Ted's Tire

decisions. Applying long established juri-

sdictional precepts, the Pennsylvania court

concluded:

We see no reason

for precluding a state

court from adjudicating

a contractual claim

arising under the PMPA,

especially where, as

here, we deal with a

Clear dictate of feder-

al law. As noted

above, the presumption

of concurrent jurisdic-

tion can be rebutted by

explicit statutory

directive, by unmistak-

able implication from

legislative history, or

by a clear incompati-

bility between state-

court jurisdiction and

federal interests. The

PMPA does not expressly

limit jurisdiction to

federal courts, and we

find no clear indica-

tion of exclusive jur-

isdiction in the legis-

lative history. Final-

ly, we perceive no in-

compatibility between

state-court jurisdic-

tion and promoting Con-

gress' intent to pro-

tect the needs of both

franchisees and fran-

chisors, to remedy dis-

parity in bargaining

power and to prevent

arbitrary or disci-

plinary termination or

nonrenewal. For the

foregoing reasons, we

find that a state court

enjoys concurrent juri-

sdiction over claims

brought under the PMPA.

See Ricco v. Shel] Oil

Co., 180 N.J. Super.

399, 434 A.2d 1151

(1981); Munno vy. Amoco

Qi] Co., 488 F.Supp.

1114 (D.C. Conn. 1980).

——_ elo

528 A.2d at 164.

In addition to Johnson, every other

published state court PMPA opinion has

found or assumed concurrent jurisdiction,

including Adams v. Iowa Oi] Co., Bus. Fran.

Guide (CCH), 4 8008 (Iowa S. Ct. 1983);

Frankard v. Amoco Oi] Co., 116 Wis. 2d 254,

342 N.W.2d 247 (1983); Davis v. Gulf Oil

Corp., 485 A.2d 160 (D.C. App. 1984); ARCO

Petroleum Products Co. v. Williams, 146

Ill. App. 3d 218, 496 N.E.2d 1098 (1986);

ERA Enterprises, Inc. v. Gulf Oil Corp.,

506 So. 2d 160 (La. App. 1987); Thomas v.

Amoco Oi] Co., 455 So. 2d 1187 (La. App.

(1984); Walters v. Chevron USA, Inc., 154

Ga. App. 636, 269 S.E.2d 495 (1980); Bates

v. Chevron USA, Inc., 151 Ga. App. 544, 260

S.E.2d 367 (1979); Consumers Petroleum of

Connecticut, Inc. v. Duhan, 38 Conn. Super.

495, 452 A.2d 123 (1982); Ricco v. Shell

Qil Co., 180 N.J. Super. 399, 434 A.2d 1151

(1981); and DaCosta's Automotive Inc. v.

Birchwood Plaza Shell, Inc., 106 A.D.2d

484, 482 N.Y.S.2d 832 (1984). The prece-

dents supporting the existence of state

court jurisdiction are overwhelming.

As courts of general jurisdiction,

. state courts regularly apply principles of

federal law to disputes that raise federal

questions. See, e.g., Dice v. Akron, Can-

ton & Youngstown Ry. Co., 342 U.S. 359,

361-63 (1952) (Ohio courts must follow FELA

requirement that all factual issues be

tried by a jury, despite “local rule of

procedure" to the contrary.)

Rustom is neither historically well-

founded nor convincing in its review of the

legislative history of PMPA. Its effect of

depriving the state courts of jurisdiction

over a large class of cases arising under a

heavily litigated statute is disquieting

and runs directly contrary to the

proclaimed congressional intent of provid-

ing petroleum franchisees with additional

protection against abusive franchise prac-

tices.

In light of Rustom and Niakan, it is

highly unlikely that any petroleum franchi-

see will risk bringing future PMPA claims

in state court, thereby effectively forcing

all new PMPA claims to be automatically

filed in the already overburdened federal

courts. Unless future litigants elect to

risk filing their PMPA claims in state

court, this petition may well be this

Court's only opportunity to resolve the

PMPA jurisdictional issue.

II. FEDERAL QUESTIONS MAY BE RAISED COL-

LATERALLY AS A MATTER OF DEFENSE.

Even assuming, arguendo, that the

California state courts lack subject matter

jurisdiction, dispositive of Petitioner's

right to have his PMPA claims adjudicated

before the California Court of Appeal is

the established rule that state courts must

consider and resolve all federal questions

raised as a matter of defense, even where

jurisdiction in the federal courts would

normally be exclusive.

Where Congress has granted exclusive

jurisdiction to the federal courts, such as

with regard to violations of the Securities

Exchange Act, state courts can and indeed

must resolve such claims where they are

raised as a matter of defense. Aetna State

Bank v. Altheimer, 430 F.2d 750, 754 (7th

Cir. 1970) (federal supremacy clause

requires state court adjudication of ex-

Clusive federal questions raised defensive-

ly); Weiner v. Shearson, Hammill & Co.,

Inc., 521 F.2d 817, 822 (9th Cir. 1975)

(state court has jurisdiction to rule on

federal securities law issues raised by

affirmative defense). As the United States

Supreme Court held in Hathorn v. Lovorn,

457 U.S. 255, 266 (1982): "[E])ven a find-

ing of exclusive federal jurisdiction over

claims arising under a federal statute usu-

ally ‘will not prevent a state court from

deciding a federal question collaterally,'"

quoting Gulf Offshore Co. v. Mobil Oil

Corp., 453 U.S. 473, 483n.12 (1981).

Petitioner was involuntarily named as

a defendant in this litigation and had no

opportunity to select the forum. It is

highly unfair, and flatly inconsistent with

established case law, to deprive Petitioner

of his right to raise all pertinent legal

defenses, including compulsory cross-com-

PSSA, ra ap ie Se Sella ih Sigg

Oe tae eee aoe

EU ted apie

plaints created by federal law, in response

to an action instituted by another in a

state forum. In adjudicating the Niakans'

claims, the California state courts were

clearly required to address the merits of

Petitioner's arguments concerning his right

to renewal under PMPA."'

In the case at bar, the California

Court of Appeal failed to carry out its

constitutional obligation to consider and

resolve the federal defenses and claims

raised by Petitioner.

III. PETITIONER'S STATE LAW CLAIMS ARE NOT

PREEMPTED BY PMPA.

The question of preemption is perhaps

the most significant and frequently liti-

” Indeed, it would have been impos-

sible for Petitioner to adequately protect

his tenancy rights in a federal forum since

the Niakans were proceeding against Peti-

tioner in the state court action and no

independent basis for federal jurisdiction

existed to bring the Niakans into federal

court as they were not "petroleum franchis-

ors" as defined in PMPA. See

Abadjian v.

Gulf Oi] Corp., 602 F. Supp. 874 (C.D. Cal.

1983).

gated legal issue raised in petroleum fran-

chisor-franchisee litigation under PMPA.

It is respectfully submitted that the pre-

emptive effect of PMPA is an issue of sub-

stantial public importance, not only with

regard to future PMPA litigation but also

for a whole array of statutory schemes in-

volving concurrent federal and state regu-

lation.

What is highly unusual about Niakan --

and of tremendous public policy importance

-- is the notion that PMPA, a remedial fed-

eral statute, somehow deprives the state

courts of the right to provide redress to

injured litigants for breaches of contract,

fraud, unfair business practices, viola-

tions of state franchise laws, and a host

of other statutory and common law protec-

tions which Congress could not conceivably

have intended to eliminate when in enacted

PMPA in 1978.

The two leading federal decisions on

the preemption issue -- Bellmore v. Mobi]

Oil Corp., 783 F.2d 300 (2d Cir. 986), and

Lippo v. Mobil Oi] Corp., 776 F.2d 706 (7th

Cir. 1985) -- both fully support Petition-

er's position.

In Bellmore, the Second Circuit, after

thoroughly reviewing the legislative his-

tory of PMPA and the existing case law,

concluded that PMPA

"preempts only state statutes as to

grounds for, procedures for and notifica-

tion requirements with respect to termina-

tion or nonrenewal." Jd. at 304. Thus,

Congress sought in § 2806 to preempt the

hodgepodge of then existing state "good

cause" statutes (see, e.g., Cal. Bus. &

Prof. Code § 20999.1) which had been enact-

ed to protect franchisees against wrongful

termination. State common law principles

and statutes relating to other nonrenewal

and termination issues are not preempted by

PMPA. Bellmore, supra, at 304.

The Second Circuit specifically rejec-

ted Mobil's argument that PMPA broadly pre-

empts "any issue related to the termination

or nonrenewal of petroleum franchises,"

responding: "We disagree. The PMPA

neither expressly or impliedly preempts all

state law relating to any aspect of the

termination or nonrenewal of petroleum

franchises." Jd. The court further noted

that it would be contrary to the intended

Congressional purpose "to read the statute

expansively" so as to interfere with the

right of a state to provide legal redress

for wrongdoing "in areas that Congress left

to the control of the states." Jd. at 305.

In Lippo v. Mobil Oi] Corp., 776 F.2d

706 (7th Cir. 1985), the court upheld a

summary judgment awarding damages, perma-

nent injunctive relief, and attorneys' fees

to a franchisee terminated for selling non-

Mobil gasoline. The court noted that under

15 U.S.C. § 2802(b)(2)(C), a franchisor can

terminate an existing franchise based upon

the "occurrence of an event which is rele-

vant to the franchise relationship and as a

result of which termination of the fran-

chise . . . is reasonable" and that §

2802(c)(10) specifically defines "misbrand-

ing of motor fuels" as a reasonable basis

for termination. 776 F.2d at 720. How-

ever, notwithstanding the express language

of § 2802(c) (10), the parties' written

franchise agreement gave the franchisee a

ten-day contractual right to cure any de-

fault. [Id.

Affirming the district court's judg-

ment in favor of the franchisee, the

Seventh Circuit rejected Mobil's contention

that the franchisee should not have been

granted an award of attorneys' fees under

PMPA since "Mobil could have terminated the

franchise under the PMPA but for [the con-

tractual provisions of] the Retail Dealer

Contract" id., specifically ruling that a

franchisor's termination decision that

fails to comply with the terms of a petrol-

eum franchise contract cannot be considered

to be "in good faith":

Claim. The PMPA is re-

medial legislation that

‘must be given a liber-

al construction consis-

tent with its overrid-

ing purpose to protect

franchisees.' In an

action brought under

section 2805(a) the

franchisee has the bur-

den of proving termina-

tion of the franchise.

(This must really mean

attempted termination

if the injunctive

relief is to be of any

use.) The franchisor

then bears the burden

of going forward with

evidence to establish

as an affirmative

defense that the termi-

nation is permitted

under section 2802(b).

15 U.S.C. § 2805(c).

Id. (citations omitted).

The Seventh Circuit explained its de-

cision as follows:

Mobil claimed termina-

tion was proper under

sections 2802(b) (2) (A)

and 2802(b)(2)(C). As

noted above, section

2802(b)(1)(C) provides

for termination for an

event relevant to the

franchise relationship,

of which the sale of

misbranded gasoline is

an example. But terni-

nation is allowed only

if it ‘is reasonable.'

A similar line of

reasoning applies to

the attempt to base the

termination on section

2802(b) (2) (A), which

allows, under certain

conditions regarding

knowledge not relevant

here, termination for a

failure by the franchi-

see to comply with a

provision of the fran-

chise when the

provision is reasonable

and of material signi-

ficance to the franc-

hise relationship.

Even if sale of non-

franchisor gasoline as

gasoline of the fran-

chisor would normally

be a failure to comply

with a reasonable and

materially significant

provision, here Mobil

gave Lippo the right to

correct such a failure.

We do not believe that

a franchisor can give

such a right of correc-

tion in its contract

and then turn around

and try to terminate

under the PMPA without

reference to that right

of correction. A ter-

Id. at 721 (emphasis added) .'*

Niakan does not discuss or even refer

to Bellmore or Lippo despite the fact that

they are clearly the most authoritative

federal cases on this subject.

Similarly, in Johnson v. Mobil Oil

Corp., 364 Pa. Super. 275, 528 A.2d 155

(1987), a case which involves facts remark-

'* accord, DiNapoli v. Exxon Corp.,

Bus. Fran. Guide (CCH), 4 7818 (D.N.J.

1982) (franchisor must comply with both

PMPA and all contractual provisions between

itself and its dealer regarding termination

or nonrenewal) (upholding award of summary

judgment in favor of plaintiff/franchisee. )

NE totbe hte Dine at)’ olay ve, Atal i a dla PRY a A LEA

ably similar to the case at bar, the court

ruled that the nonrenewal franchisee's

state law claims were not preempted by

PMPA:

We find that state law

is preempted by the

PMPA only to the extent

that it is inconsistent

with the PMPA. Appel-

and _misrepresentation

are neither covered by

528 A.2d at 162 (emphasis added).

As observed in Bellmore, PMPA was <n

tended to provide additional protection to

petroleum franchisees against arbitrary or

unfair termination or nonrenewal, not to

sweep away existing common law protections.

"The purpose of Title I of H.R. 130 is the

establishment of minimum federal standards

governing the termination and nonrenewal of

franchise relationships." Senate Report

No. 95-731, supra, at 15.

Nothing in PMPA even remotely suggests

that PMPA was intended by Congress to

create a license for petroleum companies to

abrogate binding contractual obligations

that provide franchisees with protection

beyond that mandated by federal law or that

Congress meant to give petroleum franchis-

ors carte blanche to commit acts of fraud,

acts of unfair competition, state franchise

law violations, or other violations of

state law.”

s Bellmore is far from the only case

to conclude that state law remedies are not

preempted by PMPA. Other decisions reach-

ing the same result include: Esso Standard

Oil Co. v. Department of Consumer Affairs,

793 F.2d 431 (lst Cir. 1986) (Puerto Rico

service station rent regulation statute not

preempted by PMPA); Pro Sales, Inc. v.

Texaco, Inc., 792 F.2d 1394, 1399n.7 (9th

Cir. 1986) (Oregon contract law not preemp-

ted by PMPA); Barnes v. Gulf Oi] Corp., 795

F.2d 358, 362-64 (4th Cir. 1986) (state law

concerning validity of assignment of fran-

chise not preempted by PMPA); L.C. Williams

Qil Co., Inc. v. Exxon Corp., 627 F. Supp.

864, 867-68 (M.D.N.C. 1985) (state unfair

trade practices statute and implied cove-

nant of good faith claims not preempted by

PMPA); Cason v. Texaco, Inc., 621 F. Supp.

1518, 1524 (M.D. La. 1985) (state unfair

trade practices claim not preempted by

PMPA) ; -

Inc., 577 F. Supp. 637, 645 (W.D. Mo. 1983)

("reference to State law to determine

whether an oral agreement existed between

the parties would not conflict with the

policies underlying the PMPA); DiNapoli v.

The contractual provisions of Peti-

tioner's franchise agreements provide Peti-

tioner with even greater protection against

EXxo! COrp., Bus. ¥F.’an. Guide (CCH), ¥ 7818

(D.N.J. 1982) (contractual agreement be-

tween oil company and dealer “creates a

condition precedent to Exxon's right to

terminate the franchise under the PMPA";

failure to give contractually required

notice prior to termination warrants sun-

mary judgment in favor of franchisee) ;

Lasko v. Consumers Petroleum of Connecti-

cut, Inc., 547 F. Supp. 211, 217-18 (1981)

(Connecticut franchise law not preempted) ;

, 526 F. Supp. 961,

965 (D. Conn. 1981) ("The PMPA does not

prevent the parties from entering into a

contract."); Ted's Tire Service, Inc. v.

Chevron U.S.A., Inc., 470 F. Supp. 163, 165

(D. Conn. 1979) (PMPA “does not preempt all

state laws regulating petroleum fran-

chises."). See also Senate Report No. 95-

731 at 18 ("the relationship of the parties

to a motor fuel franchise agreement is

basically contractua] in nature") (emphasis

added); Jiminez v. B.P. Oil. Inc., 652 F.

Supp. 329, 334-35 (D. Md. 1987) (Maryland

nonrenewal statute not preempted); Exxon

ers, 484 F. Supp. 1008, 1018 (N.D. Ga.

1979) aff'd, 644 F.2d 1030 (5th Cir.),

cert. denied, 454 U.S. 932 (1981) (state

law controlling "the terms of a franchise"

not preempted although statute could have

some “attenuated application to a lawsuit

over termination or nonrenewal"); Ricco v.

Shell Oi] Co., 180 N.J. Super. 399, 434

A.2d 1151, 1155 (1981) (dealer's fraud

Claims based upon nonrenewal of franchise

remanded for trial).

nonrenewal that provided by PMPA, since

loss of Union's underlying site lease was

not specified as a ground for nonrenewal in

Petitioner's franchise contract. (Trial

Ex. 37 R.T. 316-18; 347; 349-54, 478-82,

735).

IV. WHETHER SUBSTANTIAL EVIDENCE SUPPORTS

THE DIRECTED VERDICTS AGAINST THIS

PETITIONER.

By virtue of the trial court's direct-

ed verdicts based on PMPA and preemption of

Petitioner's state law claims and the Cali-

fornia Court of Appeal's finding of lack of

jurisdiction, Petitioner has been deprived

of the opportunity to present his claims to

a jury (other than his misrepresentation

claim as to which the Superior Court erron-

eously refused to give his requested jury

instructions on negligent misrepresenta-

tion).

As discussed in detail in Petitioner's

appellate briefs filed below, PMPA limits

both the grounds upon which and the manner

in which a franchisor may fail to renew a

petroleum franchise by imposing strict pro-

cedural and substantive restrictions on the

termination or failure to renew a motor

fuel distribution franchise. "The PMPA

prohibits the termination or nonrenewal of

a franchise except for specifically enumer-

ated reasons and upon the franchisor’s com-

pliance with the Act's notice require-

ments." Khorenian v. Union Oil Co. of Cal~

ifornia Inc., 751 F.2d 533, 535 (9th Cir.’

1985) (emphasis added). The primary pur-

pose of the act is to prevent petroleum

franchisors from dealing unfairly or arbi-

trarily with their franchisees. Sun Valiey

Gasoline, Inc. v. Ernst Enterprises, Inc.,

711 F.2d 138, 139 (9th Cir. 1983); Blanken-

ship v. Atlantic Richfield Co., 478 F.

Supp. 1016 (D. Or. 1979).

Once nonrenewal of a service station

franchise has occurred, it is the franchis-

or's burden of proof to show that its fail-

ure to renew falls within one of the statu-

torily recognized justifications.

Khorenian, supra, 761 F.2d at 535. In this

regard, 15 U.S.C. § 2805(c) provides that:

The franchisor

shall bear the burden

of going forward with

evidence to establish

as an affirmative defe-

nse that such

termination or nonre-

newal was permitted

under Section 2802 (b)

or 2803 of this title,

and if applicable that |

such franchisor

complied with the

requirements of Section

2802(d) of this title.

Lad IE eras line Sa

Whether a franchisor has "good cause"

to terminate or nonrenew an existing fran-

chise is a question of fact which must be

determined on the merits. Ernst Enter-

prises, Inc. v. Sun Valley Gasoline, Inc.,

139 Cal. App. 3d 355, 358-59, 188 Cal.

Rptr. 641 (1983); Roberts v. Amoco Oil Co.,

740 F.2d 602, 605-07 (8th Cir. i984); see,

e.g., Lyons v. Mobil Oi] Corp., 526 F.

Supp. 961 (D. Conn. 1981), and Lyons v.

Mobil Oi] Corp., 554 F. Supp. 199 (D. Conn.

1982) (franchisor's settlement of preexist-

ing lawsuit concerning possession of ser-

vice station premises is not an "event"

that is "relevant" to the franchise rela-

tionship and cannot serve as a proper basis

for termination of franchise under 15

U.S.C. § 2802(c).)

With regard to the instant litigation,

PMPA permitted Union not to renew Petition-

er's franchise based upon the loss of its

underlying site lease if and only if Union

proved at trial that each of the following

six elements was met:

1. That Samaan was notified in writ-

ing by Union prior to "the commencement of

the term of [his] then existing franchise"

that "the underlying lease might expire and

might not be renewed - « « at the end of

such term (in the case of nonrenewal)" (15

U.S.C. § 2802(c) (4) (B));

2 That Union's decision not to re-

new the site lease was made "in good faith

and in normal course of business" (15

U.S.C. § 2802(b) (3) (D));

Re That Union notified Samaan of its

nonrenewal decision "not more than 120

days" after it "first acquired actual or

constructive knowledge" of the event jus-

tifying nonrenewal (15 U.S.C. §

2802 (b) (2) (C) (I));

4. That the event which let Union to

nonrenew Samaan's franchise occurred "dur-

ing the period the franchise was in

effect," (15 U.S.C. § 2802(b) (2) (C));

5. That Union's notice of nonrenewal

informed Samaan "in writing" of the actual

"reasons" for its nonrenewal of the fran-

chise (15 U.S.C. § 2804(c)); and

6. That Union "made a bona fide of-

fer to sell, transfer, or assign to the

franchisee [its] interests in [the service

station] premises" within "the 90-day

period" following Samaan's receipt of the

notice of nonrenewal (15 U.S.C. §

2802(b) (3) (D) (iii)).

The uncontroverted evidence at trial

clearly demonstrated that Union's nonre-

newal of Petitioner's service station fran-

chise did not comply with the applicable

PMPA requirements and was invalid as a mat-

ter of law. A detailed recitation of the

respondents' violations of PMPA is set

forth at pages 19-39 of Appellant's Opening

Brief filed with the California Court of

Appeal.

Respondents! legal contention through-

out this lawsuit that a petroleum franchis-

or has no obligation under PMPA to exercise

an option to extend an underlying site

lease is an incomplete and inaccurate stat-

ement of the applicable law. While a

petroleum franchisor may elect not to renew

an existing site lease, the petroleum fran-

chisor can do so only if it fully complies

with all applicable procedural and notifi-

cation requirements of PMPA. Absent strict

compliance with such mandatory require-

ments, a petroleum franchisor is guilty of

a per se violation of PMPA and the dealer

is entitled to "renewal for another three

year term." Blankenship v. Atlantic Rich-

field Co., 478 F. Supp. 1016, 1019 (D. Or.

1979). Union cites no authority, and

indeed there is none, permitting an oil

company to nonrenew a service station deal-

er based upon loss of an underlying lease,

notwithstanding the petroleum franchisor's

and fe) u qui i

Similarly, it was shown at trial that

Samaan was contractually entitled to even

greater protection against nonrenewal

since, unlike PMPA, loss of Union's site

lease is not specified as a ground for non-

renewal in Samaan's franchise contract.

(Trial Ex. 3; R.T. 316-18; 347-54; 478-82;

735).

In addition, substantial evidence was

presented before the Superior Court that

Union negligently misrepresented to Samaan

the duration of his franchise rights at the

Wilshire service station (R.T. 45-65, 305,

309, 312-313, 399-400, 571-572) and commit-

ted other unfair business practices for

which relief should be awarded. See

Hartman v. Shel] Oi] Co., 68 Cal. App. 3d

240, 248, 137 Cal. Rptr. 244 (1977);

Wojciechowski v. Amoco Oi] Co., 483 F.

Supp. 109, 114-15 (E.D. Wis. 1980)

(franchisor's "acts of fraud" preclude ter-

mination); Johnson v. Mobil Oil Corp., 364

Pa. Super. 275, 528 A.2d 155 (1987).

CONCLUSION

This Court should grant its Writ of

Certiorari to review the decision in this

case in order to finally resolve the impor-

tant federal questions of jurisdiction and

preemption under PMPA, issues as to which

the various stete courts and lower federal

courts have continually reached diametri-

cally opposing results. The case at bar

presents this Court with a unique opportu

a ene aN a ee ae aN ae eae

nity to resolve both of these critical is-

sues upon a completed record.

Respectfully submitted,

MINUTILLO & GORMAN

By: /s/ John C. Gorman

JOHN C. GORMAN

Attorneys for Petitioner

ISSA ELIAS SAMAAN

MINUTILLO & GORMAN

By: /s/ John C. Gorman

JOHN C. GORMAN

Attorneys for Petitioner

ISSA ELIAS SAMAAN

APPENDIZ A

F. NIAKAN, E. Niakan, Ben Niakan,

Bob Niakan and Betty Niakan,

Plaintiffs and Respondents

Vv.

Issa Elias SAMAAN, Defendant and Appellant.

Union Oil Company of California,

Defendant and Respondent.

Civ. No. B0O15459.

Court of Appeal, Second District,

Division 5

February 16, 1988.

Owners of property sued gasoline fran-

chisee seeking declaration that franchisee

had no right to remain on premises beyond

expiration of sublease with gasoline fran-

chisor. Franchisee cross-complained a.leg-

ing violations of federal Petroleum Market-

ing Practices Act. The Superior Court, Los

Angeles County, Jacqueline L. Weiss, J.,

entered judgment against franchisee on his

cross claims, and appeal followed. The

Court of Appeal, Hastings, J., retired,

assigned, held that state court did not

APP-1

have jurisdiction of franchisee's claims,

as such claims under Petroleum Marketing

Practices Act were within exclusive juris-

diction of federal courts.

Appeal dismissed.

Courts 489(1)

State court did not have jurisdiction

over claims asserted by gasoline franchisee

alleging improper termination of franchise,

as federal court had exclusive jurisdiction

of any action brought under Petroleum Mar-

keting Practices Act. Petroleum Marketing

Practices Act, § 101 et seq., 15 U.S.C.A. §

2801 et seq.

Minutillo & Gorman, John C. Gorman,

San Jose, Kindel & Anderson, and David Lau-

fer, Woodland Hills, for defendant and ap-

pellant.

Margolis, Ryan, Burrill & Besser, Rob-

ert S. Besser and Christopher Chapin, Los

Angeles, for defendant and respondent Union

Oil Ce.

APP-2

Thomas E. Reeks, Los Angeles, for

plaintiffs and respondents.

HASTINGS, Associate Justice.”

Defendant/Appellant Issa Elias Samaan

(appellant) appeals from the judgment

entered against him and in favor of plain-

tiffs/respondents F. Niakan, E. Niakan, Ben

Niakan and Betty Niakan (the Niakans) and

Union Oil Company of California (Union

Oil); and from denial of his motion for a

new trial.

FACTS:

station

Angeles

a Union

1963, Union 0il' leased a service

site on Wilshire Boulevard in Los

from the Sheffields and constructed

Oil Station facility on the site.

The original term of the lease expired on

* Retired Associate Justice of the

Court of Appeal serving as a senior judge

by order of the chairperson of the Judicial

Council.

' union Oil is a petroleum marketing

franchisor, as defined by the Petroleum

Marketing Practices Act, 15 U.S.C. § 2801

et seq.

APP-3

April 30, 1979. The lease contained op-

tions to extend the lease for two five-year

periods. On September 30, 1980, Union Oil

exercised one of its two options to extend

the site lease. The new expiration date

was scheduled for April 30, 1984. The

Sheffields subsequently sold the site to

the Niakans.

On July 15, 1977, Union entered into a

franchise agreement with appellant which

encompassed a sub-lease of the same Wil-

shire Blvd. service station site. The sub-

lease was for a three-year period ending

July 14, 1980. On September 30, 1980,

Union Oil and appellant entered into

another three-year franchise which, by its

terms, commenced on September 15, 1980 and

expired on September 30, 1983. When these

franchise lease documents were delivered to

appellant for signature, he was given writ-

ten notice of the April 30, 1984 expiration

date of the site lease.

In August 1981, Union Oil entered into

a settlement agreement with the Sheffields

and Niakans, in order to settle a lawsuit

brought by the Sheffields in 1977. The

Sheffield suit claimed retroactive rental

increases were due under the site lease.

Under the terms of the settlement, Union

Oil relinquished its option to extend the

site lease for an additional five-year term

and its tenancy of the site beyond Septem-

ber 30, 1983 (appellant's sub-lease's ex-

piration date).

Appellant did not receive notice of

this settlement and learned about it in

June, 1982, from the Niakans' attorney. Up

to that time, he understood the site lease

was due to expire on April 30, 1984. Ap-

pellant took the position that the settle-

ment agreement was invalid as to his inter-

est and that he was entitled to remain in

possession of the site beyond the expira-

tion date of his lease with Union Oil

APP-5

through the term of the sgecond option

lease, i.e., April 30. 1989.

The Niakans had planned to convert the

site to a different use. When they could

not secure an agreement to vacate from ap-

pellant, they filed suit in November 1982,

seeking a judicial declaration that appel-

lant had no further right to remain on the

premises beyond the expiration of his sub-

lease, September 30, 1983.

Appellant cross-complained against the

Niakans, the Sheffields and Union Oil. Of

the eight causes of action contained in the

cross-complaint, only the following five

; are pertinent to this appeal: The first

cause of action, against Union Oil, alleged

violation of the federal Petroleum Market-

ing Practices Act (PMPA), 15 U.S.C. section

2801 et seq., as a result of Union Oil's

nonrenewal of appellant's service station

franchise. The Niakans are also named as

cross-defendants as to the first cause of

action for conspiring with Union Oil to

APP-6

violate appellant's franchise rights under

PMPA. The fifth cause of action, against

Union Oil, alleged unfair trade practices

in violation of California Business and

Professions Code section 17200. The sixth

and seventh causes of action, against Union

Oil, alleged breach of the implied covenant

of good faith and fair dealing and breach

of written contract. The eighth cause of

action, against Union Oil, alleged misrep-

resentation, as to the duration of appel-

lant's franchise.

At the conclusion of the presentation

of evidence, the court directed a verdict

against appellant as to each cause of ac-

tion, except the eighth. The issue of

whether Union Oil fraudulently misrepres-

ented the length of appellant's lease was

decided by the jury in Union Oil's favor.

On appeal, appellant contends the

court made errors of law when it directed

verdicts against him as to causes of action

1, 5, 6 and 7; and when it refused his

APP-7

requested jury instructions on negligent

misrepresentation and concealment. Appel-

lant further argues that the bailiff's con-

duct at trial deprived him of a fair trial.

Union Oil counters that each of the

causes of action of which appellant seeks

reversal either are directly governed or

are pre-empted by the PMPA, and that the

federal court has exclusive jurisdiction

for any action grounded in the PMPA. Ac-

cordingly, the entire appeal should be dis-

missed for lack of subject matter jurisdic-

tion. We concur.

All parties agree that Union Oil is a

petroleum marketing franchisor as defined

by PMPA section 2801, subdivision (3), and

that the franchise agreement is subject to

requirements of the PMPA. All the causes

of action, summarized above, stem from

Union Oil's failure to renew appellant's

petroleum marketing franchise.

Subsequent to trial on this matter,

the United States District Court for Centr-

APP-8

al California has addressed the question of

whether the federal courts have exclusive

jurisdiction over actions brought under the

PMPA. In Rustom v. Atlantic Richfield Co.

(C.D.Cal.1985) 618 F.Supp. 210, the court

acknowledged the presumption that state

courts have concurrent jurisdiction. It

noted, however, that this ". . . presump-

tion may be rebutted 'by unmistakable in-

plication from legislative history, or by a

clear incompatibility between state-court

jurisdiction and federal interests.' (Ci-

tation.) (Id. at p. 212.) After analyzing

the legislative history as well as the lan-

guage and the requirements of the statute, *

the court concluded that Congress intended

¢ The court noted that while the PMPA

does not specifically require action to be

brought solely in federal district court,

both House and Senate reports state that

the provisions of the PMPA “are enforceable

by private civil action in U.S. District

Court"; there is no mention in the reports

of bringing PMPA actions in state courts;

and the PMPA incorporates standards under

the Federal Rules of Civil Procedure to the

award of damages and to the issuance of

preliminary injunctions.

APP-9

to vest the federal courts with exclusive

jurisdiction over actions brought under the

PMPA. (Id. at p. 214.) This holding has

been followed in Elimelekh, et al. v. Texa-

co Refining & Marketing Inc. (C.D.Cal.1986,

Business Franchise Guide, {4 8663, pp.

16751-16752).

Our research indicates that the body

of case law developed under the PMPA con-

sists almost entirely of federal court de-

cisions. Moreover, on two occasions, our

appellate court has held that all Califor-

nia state law remedies for wrongful termi-

nation or nonrenewal have been pre-empted

by the PMPA. (California Arco Distribu-

tors, Inc. v. Atlantic Richfield Co. (1984)

158 Cal.App.3d 349, 204 Cal.Rptr. 743;

Mobile Oil Corp. v. Superior Court (1987)

189 Cal.App.3d 485, 234 Cal.Rptr. 482; see

also 15 U.S.C., § 2806.)

The PMPA is federal legislation apply-

ing federal remedies which have been exten-

sively interpreted by federal courts and

APP-10

jurisdiction. The Leetaiative history of

this act (1978 U.S. Code, Cong. & Adn.

News, vol. 3, p. 873 et seq.) reveals a

strong legislative concern for development

of a uniform body of federal law to address

the problems associated with termination

and nonrenewal of franchise relationship.

In addition, it has been held that federal

courts retain exclusive jurisdiction over

suits brought under the PMPA. (Ruston,

supra.) We accept the Rustom court analy-

sis and conclude that our state courts lack

° Accordingly, the appeal is

jurisdiction.

dismissed. Each party to bear own costs.

FEINERMAN, P.J., and BOREN, J., con-

cur.

3 we have read the record and conclude

were this not the case, an affirmance would

lie. There is substantial evidence to

support the trial court's directed ver-

dicts, and appellant's other contentions

are meritless.

APP-11

APPENDIZ B

IN THE COURT OF APPEAL

OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

F. NIAKAN, E. NIAKAN, ) 2d Civil No.B015459

BEN NIAKAN, BOB ) (Super. Ct. No.

NIAKAN, ) WEC77378)

)

Plaintiffs and Re- ) ORDER OF

spondents, ) PUBLICATION

)

Vv. ) COURT OF APPEAL -

) SECOND DIST. FILED

ISSA ELIAS SAMAAN, ) MARCH 17, 1988

) ROBERT N. WILSON

Defendant and Appel- ) CLERK

lant, )

)

UNION OIL COMPANY OF )

CALIFORNIA, )

)

Defendant and Re- )

spondent. }

)

THE COURT:

Good cause appearing, the opinion

heretofore filed in the above entitled mat-

ter, on February 16, 1988, Not to be Pub-

lished, is hereby deemed suitable for pub-

lication.

Therefore, it is ordered Certified for

Publication.

a ee ee een eereeee ee Cne

APPENDIX C

ORDER DENYING REVIEW

AFTER JUDGMENT BY THE COURT OF APPEAL

2nd District, Divisior 5, No. BO15459

S005069

IN THE SUPREME COURT OF

THE STATE OF CALIFORNIA

IN BAN K

NIAKAN et al., Respondents,

Vv.

SAMAAN, Appellant,

UNION OIL CO. OF CALIFORNIA, Respondent.

Appellant's petition for review DENIED.

Mosk, J. and Broussard, J. are of the

opinion the petition should be granted.

LUCAS

Chief Justice

APP-13

APPENDIZ D

PETROLEUM MARKETING PRACTICES ACT,

15 U.S.C. §§ 2801-2806

SUBCHAPTER I -- FRANCHISE PROTECTION

§ 2801. Definitions

As used in this subchapter:

(1) (A) The term "franchise" means any

contract --

(i)

(ii)

(iii)

(iv)

between a refiner and a dis-

tributor.

between a refiner and a re-

tailer,

between a distributor and

another distributor, or

between a distributor and a

retailer,

under which a refiner or distributor (as

the case may be) authorizes or permits a

retailer or distributor to use, in connec-

tion with the sale, consignment, or distri-

bution of motor fuel, a trademark which is

owned or controlled by such refiner or by a

refiner which supplies motor fuel to the

distributor which authorizes or permits

such use.

(B) The term "franchise" includes --

(i)

any contract under which a

retailer or distributor (as the case

may be) is authorized or permitted to

occupy leased marketing premises,

which premises are to be employed in

connection with the sale, consignment,

or distribution of motor fuel under a

trademark which is owned or controlled

APP-14

by such refiner or by a refiner which

supplies motor fuel to the distributor

which authorizes or permits such oc-

cupancy;

(ii) any contract pertaining to

the supply of motor fuel which is to

be sold, consigned or distributed --

(I) under a trademark

owned or controlled by a refiner;

(II) under a contract

which has existed continuously

since May 15, 1973, and pursuant

to which, on May 15, 1973, motor

fuel was sold, consigned or dis-

tributed under a trademark owned

or controlled on such date by a.

refiner; and

(III) the unexpired portion

of any franchise, as defined by

the preceding provisions of this

paragraph, which is transferred

or assigned as authorized by the

provisions of such franchise or

by any applicable provision of

State law which permits such

transfer or assignment without

regard to any provision of the

franchise.

(2) The term "franchise relationship"

means the respective motor fuel marketing

or distribution obligations and responsi-

bilities of a franchisor and a franchisee

which result from the marketing of a motor

fuel under a franchise.

(3) The term "franchisor" means a re-

finer or distributor (as the case may be)

who authorizes or permits, under a fran-

chise, a retailer or distributor to use a

APP-15

trademark in connection with the sale, con-

signment, or distribution of motor fuel.

(4) The term "franchisee" means a re-

tailer or distributor (as the case may be)

who is authorized or permitted, under a

franchise, to use a trademark in connection

with the sale, consignment, or distribution

of motor fuel.

(5) The term "refiner" means any person

engaged in the refining of crude oil to

produce motor fuel, and includes any affil-

iate of such person.

(6) The term "distributor" means any

person, including any affiliate of such

person, who --

(A) purchases motor fuel for sale,

consignment, or distribution to

another; or

(B) receives motor fuel on consign-

ment for consignment or distribution

to his own motor fuel accounts or to

accounts of his supplier, but shall

not include a person who is an employ-

ee of, or merely serves as a common

carrier providing transportation ser-

vice for, such supplier.

(7) The term "retailer" means any person

who purchases motor fuel for sale to the

general public for ultimate consumption.

(8) The term "marketing premises" means,

in the case of any franchise, premises

which, under said franchise, are to be em-

ployed by the franchisee in connection with

the sale, consignment, or distribution of

motor fuel.

(9) The term "leased marketing premises"

means marketing premises owned, leased, or

in any way controlled by a franchisor and

APP-16

which the franchisee is authorized or per-

mitted, under the franchise, to employ in

connection with the sale, consignment, or

distribution of motor fuel.

(10) The term "contract" means any oral

or written agreement. For supply purposes,

delivery levels during the same month of

the previous year shall be prima facie evi-

dence of an agreement to deliver such

levels.

(11) The term "trademark" means any

trademark, trade name, service mark, or

other identifying symbol or name.

(12) The term "motor fuel" means gaso-

line and diesel fuel of a type distributed

for use as a fuel in self-propelled

vehicles designed primarily for use on pub-

lic streets, roads, and highways.

(13) The term "failure" does not include

(A) any failure which is only tech-

nical or unimportant to the franchise

relationship; or

(B) any failure for a cause beyond

the reasonable control of the franchi-

see.

(14) The terms "fail to renew" and

"nonrenewal" mean, with respect to any

franchise relationship, a failure to rein-

state, continue, or extend the franchise

relationship --

(A) at the conclusion of the tern,

or on the expiration date, stated in

the relevant franchise;

(B) at any time, in the case of the

relevant franchise which does not

APP-17

Da anc seen a «PU ae on ae ee maemamme ca nae eam ee ree

state a term of duration or an expira-

tion date; or

after June 19, 1978) of the relevant

franchise which was entered into prior

to June 19, 1978, and has not been

renewed after such date.

(15) The term "affiliate" means any per-

son who (other than by means of a fran-

chise) controls, is controlled by, or is

under common control with, any other per-

son.

(16) The term "relevant geographic mar-

ket area" includes a State or standard met-

ropolitan statistical area as periodically

established by the Office of Management and

Budget.

(17) The term "termination" includes

cancellation.

(18) The term "commerce" means any

trade, traffic, transportation, exchange or

other commerce --

(A) between any State and any place

outside of such State; or

(B) which affects any trade, trans-

portation, exchange, or other commerce

described in subparagraph (A).

(19) The term "State" means any State of

the United States, the District of Colun-

bia, the Commonwealth of Puerto Rico, the

Virgin Islands, American Samoa, Guam, and

any other commonwealth, territory, or pos-

session of the United States.

§ 2802. Franchise relationship

General prohibition against termination or

nonrenewal

APP-18

(a) Except as provided in subsection (b)

of this section and section 2803 of this

title, no franchisor engaged in the sale,

consignment, or distribution of motor fuel

in commerce may --

(1) terminate any franchise

(entered into or renewed on or after

June 19, 1978) prior to the conclusion

of the term, or the expiration date,

stated in the franchise; or

(2) fail to renew any franchise

relationship (without regard to the

date on which the relevant franchise

was entered into or renewed).

Precondition and grounds for termination or

nonrenewal

(b)(1) Any franchisor may terminate any

franchise (entered into or renewed on or

after June 19, 1978) or may fail to renew

any franchise relationship, if --

(A) the notification requirements

of section 2804 of this title are met;

and

(B) such termination is based upon

a ground described in paragraph (2) or

such nonrenewal is based upon a ground

described in paragraph (2) or (3).

(2) For purposes of this subsection,

the following are grounds for termination

of a franchise or nonrenewal of a franchise

relationship:

(A) A failure by the franchisee to

comply with any provision of the fran-

chise, which provision is both reason-

able and of material significance to

the franchise relationship, if the

franchisor first acquired actual or

APP-19

constructive knowledge of such failure

(i) not more than 120 days

prior to the date on which noti-

fication of termination or non-

renewal is given, if notification

is given pursuant to section

2804(a) of this title; or

(ii) not more than 60 days

prior to the date on which noti-

fication of termination or non-

renewal is given, if less than 90

days notification is given pur-

suant to section 2804(b)(1) of

this title.

(B) A failure by the franchisee to

exert good faith efforts to carry out

the provisions of the franchise, if --

(i) the franchisee was ap-

prised by the franchisor in writ-

ing of such failure and was af-

forded a reasonable opportunity

to exert good faith efforts to

carry out such provisions; and

(ii) such failure thereafter

continued within the period which

began not more than 180 days be-

fore the date notification of

termination or nonrenewal was

given pursuant to section 2804 of

this title.

which is relevant to the franchise

relationship and as a result of which

termination of the franchise or non-

renewal of the franchise relationship

is reasonable, if such event occurs

during the period the franchise is in

effect and the franchisor first ac-

APP-20

quired actual or constructive knowl-

edge or such occurrence --

(i) not more than 120 days

prior to the date on which noti-

fication of termination or non-

renewal is given pursuant to sec-

tion 2804(a) of this title; or

(ii) not more than 60 days

prior to the date on which noti-

fication of termination or non-

renewal is given, if less than 90

days notification is given pur-

suant to section 2804(b) (1) of

this title.

(D) An agreement, in writing, be-

tween the franchisor and the franchi-

see to terminate the franchise or not

to renew the franchise relationship,

if --

(i) such agreement is entered

into not more than 180 days prior

to the date of such termination

or, in the case of nonrenewal,

not more than 180 days prior to

the conclusion of the term, or

the expiration date, stated in

the franchise;

(ii) the franchisee is promptly

provided with a copy of such

agreement, together with the sum-

mary statement described in sec-

tion 2804(d) of this title; and

(iii) within 7 days after the

date on which the franchisee is

provided a copy of such agree-

ment, the franchisee has not

posted by certified mail a writ-

ten notice to the franchisor re-

pudiating such agreement.

APP-21

Vea... .S.L..4.4Q5.

(E) In the case of any franchise

entered into prior to June 19, 1978,

and in the case of any franchise

entered into or renewed on or after

such date (the term of which is 3

years or longer, or with respect to

which the franchisee was offered a

term of 3 years or longer), a deter-

mination made by the franchisor in

good faith and in the normal course of

business to withdraw from the market-

ing of motor fuel through retail out-

lets in the relevant geographic market

area in which the marketing premises

are located, if --

(i) such determination --

(I) was made after the

date such franchise was en-

tered into or renewed, and

(II) was based upon the

occurrence of changes in

relevant facts and circun-

stances after such date;

(ii) the termination or nonre-

newal is not for the purpose of

converting the premises, which

are the subject of the franchise,

to operation by employees or

agents of the franchisor for such

franchisor's own account; and

(iii) in the case of leased mar-

keting premises --

(I) the franchisor, dur-

ing the 180-day period after

notification was given pur-

suant to section 2804 of

this title, either made a

bona fide offer to sell,

transfer, or assign to the

franchisee such franchisor's

APP-22

interest in such premises,

or, if applicable, offered

the franchisee a right of

first refusal of at least 45

days duration of an offer,

made by another, to purchase

such franchisor's interest

in such premises; or

(II) in the case of the

sale, transfer, or assign-

ment to another person of

the franchisor's interest in

such premises in connection

with the sale, transfer, or

assignment to such other

person of the franchisor's

interest in one or more

other marketing premises, if

such other person offers, in

good faith, a franchise to

the franchisee on terms and

conditions which are not

discriminatory to the fran-

chisee as compared to fran-

chises then currently being

offered by such other person

or franchises then in effect

and with respect to which

such other person is the

franchisor.

(3) For purposes of this subsection,

the following are grounds for nonrenewal of

a franchise relationship:

(A) The failure of the franchisor

and the franchisee to agree to changes

or additions to the provisions of the

franchise, if --

(i) such changes or additions

are the result of determinations

made by the franchisor in good

faith and in the normal course of

business; and

APP-23

(ii) such failure is not the

result of the franchisor's insis-

tence upon such changes or addi-

tions for the purpose of prevent-

ing the renewal of the franchise

relationship.

(B) The receipt of numerous bona

fide customer complaints by the fran-

chisor concerning the franchisee's

ri aac of the marketing premises,

f --

(i) the franchisee was prompt-

ly apprised of the existence and

nature of such complaints follow-

ing receipt of such complaints by

the franchisor; and

(ii) if such complaints related

to the condition of such premises

or to the conduct of any employee

of such franchisee, the franchi-

see did not promptly take action

to cure or correct the basis of

such complaints.

operate the marketing premises in a

clean, safe, and healthful manner, if

the franchisee failed to do so on two

or more previous occasions and the

franchisor notified the franchisee of

such failures.

(D) In the case of any franchise

entered into prior to June 19, 1978,

(the unexpired term of which, on such

date, is 3 years or longer) and, in

the case of any franchise entered into

or renewed on or after such date (the

term of which was 3 years or longer,

or with respect to which the franchi-

see was offered a term of 3 years or

longer), a determination made by the

APP-24

franchisor in good faith and in the

normal course of business, if --

(i) such determination is --

(I) to convert the leased

marketing premises to a use

other than the sale or dis-

tribution of motor fuel,

(II) to materially alter,

add to, or replace such

premises,

(III) to sell such premis-

es, or

(IV) that renewal of the

franchise relationship is

likely to be uneconomical to

the franchisor despite any’

reasonable changes or rea-

sonable additions to the

provisions of the franchise

which may be acceptable to

the franchisee;

(ii) with respect to a deter-

mination referred to in subclause

(II) or (IV), such determination

is not made for the purpose of

converting the leased marketing

premises to operations by employ-

ees or agents of the franchisor

for such franchisor's own

account; and

(iii) in the case of leased mar-

keting premises such franchisor,

during the 90-day period after

notification was given pursuant

to section 2804 of this title,

either --

(I) made a bona fide of-

fer to sell, transfer, or

APP-25

assign to the franchisee

such franchisor's interests

in such premises; or

(II) if applicable, of-

fered the franchisee a right

of first refusal of at least

45 days duration of an of-

fer, made by another, to

purchase such franchisor's

interest in such premises.

Definition

this section, the term "an event which is

relevant to the franchise relationship and

as a result of which termination of the

franchise or nonrenewal of the franchise

relationship is reasonable" includes events

such as --

(1) fraud or criminal misconduct by

the franchisee relevant to the opera-

tion of the marketing premises;

(2) declaration of bankruptcy or

judicial determination of insolvency

of the franchisee;

(3) continuing severe physical or

mental disability of the franchisee of

at least 3 months duration which ren-

ders the franchisee unable to provide

for the continued proper operation of

the marketing premises;

(4) loss of the franchisor's right

to grant possession of the leased mar-

keting premises through expiration of

an underlying lease, if the franchisee

was notified in writing, prior to the

a commencement of the term of the then

e existing franchise --

APP-26

(A) of the duration of the

underlying lease, and

(B) of the fact that such un-

derlying lease might expire and

not be renewed during the term of

such franchise (in the case of

termination) or at the end of

such term (in the case of nonre-

newal) ;

(5) condemnation or other taking,

in whole or in part, of the marketing

premises pursuant to the power of emi-

nent domain;

(6) loss of the franchisor's right

to grant the right to use the trade-

mark which is the subject of the fran-

chise, unless such loss was due to

trademark abuse, violation of Federal

or State law, or other fault or negli-

gence of the franchisor, which such

abuse, violation, or other fault or

negligence is related to action taken

in bad faith by the franchisor;

(7) destruction (other than by the

franchisor) of all or a substantial

part of the marketing premises;

(8) failure by the franchisee to

pay to the franchisor in a timely man-

ner when due all sums to which the

franchisor is legally entitled;

(9) failure by the franchisee to

operate the marketing premises for --

(A) 7 consecutive days, or

(B) such lesser period which

under the facts and circumstances

constitutes an unreasonable per-

iod of time;

APP-27

(10) willful adulteration, mis-

labeling or misbranding of motor fuels

or other trademark violations by the

franchisee;

(11) knowing failure of the fran-

chisee to comply with Federal, State,

or local laws or regulations relevant

to the operation of the marketing

premises; and

(12) conviction of the franchisee

of any felony involving moral turpi-

tude.

Compensation, etc., for franchisee

upon condemnation or destruction

of marketing premises

(ad) In the case of any termination of a

franchise (entered into or renewed on or >

after June 19, 1978), or in the case of any

nonrenewal of a franchise relationship

(without regard to the date on which such

franchise relationship was entered into or

renewed) --

(1) if such termination or nonre-

newal is based upon an event described

in subsection (c)(5) of this section,

the franchisor shall fairly apportion

between the franchisor and the fran-

chisee compensation, if any, received

by the franchisor based upon any loss

of business opportunity or good will;

and

(2) if such termination or nonre-

newal is based upon an event described

in subsection (c)(7) of this section

and the leased marketing premises are

subsequently rebuilt or replaced by

the franchisor and operated under a

franchise, the franchisor shall, with-

in a reasonable period of time, grant

too the franchisee a right of first

APP-28

refusal of the franchise under which

such premises are to be operated.

§ 2803. Trial and interim franchises

Nonapplicability of statutory

nonrenewal provisions

(a) The provisions of section 2802 of

this title shall not apply to the nonrenew-

al of any franchise relationship --

(1) under a trial franchise; or

(2) under an interim franchise.

Definitions

(b) For purposes of this section --

(1) The term "trial franchise"

means any franchise --

(A) which is entered into on

or after June 19, 1978;

(B) the franchisee of which

has not previously been a party

to a franchise with the franchis-

or;

is for a period of not more than

1 year; and

(D) which is in writing and

states clearly and conspicuously

(i) that the franchise is

a trial franchise;

(ii) the duration of the

initial term of the fran-

chise;

APP-29

(iii) that the franchisor

may fail to renew the fran-

chise relationship at the

conclusion of the initial

term stated in the franchise

by notifying the franchisee,

in accordance with the pro-

visions of section 2804 of

this title, of the franchis-

or's intention not to renew

the franchise relationship;

and

(iv) that the provisions

of section 2802 of this

title, limiting the right of

a franchisor to fail to re-

new a franchise relation-

ship, are not applicable to

such trial franchise.

(2) The term "trial franchise" does

not include any unexpired period of

any term of any franchise (other than

a trial franchise, as defined by para-

graph (1)) which was transferred or

assigned by a franchisee to the extent

authorized by the provisions of the

franchise or any applicable provision

of State law which permits such trans-

fer or assignment, without regard to

any provision of the franchise.

(3) The term "interim franchise"

means any franchise --

(A) which is entered into on

or after June 19, 1978;

(B) the term of which, when

combined with the terms of all

prior interim franchises between

the franchisor and the franchi-

see, does not exceed 3 years;

APP-30

which occurs immediately after

the expiration of a prior fran-

chise, applicable to the market-

ing premises, which was not re-

newed if such nonrenewal --

(i) was based upon a de-

termination described in

section 2802(b)(2)(E) of

this title, and

(ii) the requirements of

section 2802(b)(2)(E) of

this title were satisfied;

and

(D) which is in writing and

states clearly and conspicuously

(i) that the franchise is

an interim franchise;

(ii) the duration of the

franchise; and

(iii) that the franchisor

may fail to renew the fran-

chise at the conclusion of

the term stated in the fran-

chise based upon a determi-

nation made by the franchis-

or in good faith and in the

normal course of business to

withdraw from the marketing

of motor fuel through retail

outlets in the relevant geo-

graphic market area in which

the marketing premises are

located if the requirements

of section 2802(b) (2) (E) (ii)

and (iii) of this title are

satisfied.

APP-31

Nonrenewal upon meeting statutory

notification requirements

section 2804 of this title are met, any

franchisor may fail to renew any franchise

relationship --

(1) under any trial franchise, at

the conclusion of the initial term of

such trial franchise; and

(2) under any interim franchise, at

the conclusion of the term of such

interim franchise, if --

(A) such nonrenewal is based

upon a determination described in

section 2802(b)(2)(E) of this

title; and

(B) the requirements of sec-

tion 2802(b) (2) (E) (ii) and (iii)

of this title are satisfied.

§ 2804. Notification of termination or

nonrenewal of franchise relationship.

General requirements applicable

to franchisor

(a) Prior to termination of any fran-

chise or nonrenewal of any franchise rela-

tionship, the franchisor shall furnish not-

ification of such termination or such non-

renewal to the franchisee who is a party to

such franchise or such franchise relation-

ship --

(1) in the manner described in sub-

section (c) of this section; and

(1) except as provided in subsec-

tion (b) of this section, not less

than 90 days prior to the date on

APP-32

which such termination or nonrenewal

takes effect.

Additional requirements applicable

to franchisor

(b)(1) In circumstances in which it

would not be reasonable for the franchisor

to furnish notification, not less than 90

days prior to the date on which termination

or nonrenewal takes effect, as required by

subsection (a)(2) of this section --

(A) such franchisor shall furnish

notification to the franchisee affec-

ted thereby on the earliest date on

which furnishing of such notification

is reasonably practicable; and

(B) in the case of leased marketing

premises, such franchisor --

(i) may not esxtablish a new

franchise relationship with re-

spect to such premises before the

expiration of the 30-day period

which begins --

(I) on the date notifica-

tion was posted or personal-

ly delivered, or

(II) if later, on the date

on which such termination or

nonrenewal takes effect; and

(ii) may, if permitted to do so

by the franchise agreement, re-

possess such premises and, in

circumstances under which it

would be reasonable to do so,

operate such premises through

employees or agents.

(2) In the case of any termination of

any franchise or any nonrenewal of any

APP-33

franchise relationship pursuant to the pro-

visions of section 2802(b)(2)(E) of this

title or section 2803(c)(2) of this title,

the franchisor shall --

(A) furnish notification to the

franchisee not less than 180 days

prior to the date of which such ter-

mination or nonrenewal takes effect;

and

(B) promptly provide a copy of such

notification, together with a plan de-

scribing the schedule and conditions

under which the franchisor will with-

draw from the marketing of motor fuel

through retail outlets in the relevant

geographic area, to the Governor of

each State which contains a portion of

such area. ;

Manner and form of notification

(1) shall be in writing;

(2) shall be posted by certified

mail or personally delivered to the

franchisee; and

(3) shall contain --

(A) a statement of intention

to terminate the franchise or not

to renew the franchise relation-

ship, together with the reasons

therefor;

(B) the date on which such

termination or nonrenewal takes

effect; and

pared under subsection (d) of

this section.

APP-34

Preparation, publication, etc.

of statutory summaries

(d)(1) Not later than 30 days after June

19, 1978, the Secretary of Energy shall

prepare and publish in the Federal Register

a simple and concise summary of the provi-

sions of this subchapter, including a

statement of the respective responsibili-

ties of, and the remedies and relief avail-

able to, any franchisor and franchisee un-

der this subchapter.

(2) In the case of summaries required to

be furnished under the provisions of sec-

tion 2802(b)(2)(D) of this title or subsec-

tion (c)(3)(C) of this section before the

date of publication of such summary in the

Federal Register, such summary may be fur-

nished not later than 5 days after it is so

published rather than at the time required

under such provisions.

§ 2805. Enforcement provisions

Maintenance of civil action by franchisee

against franchisor; jurisdiction and venue;

time for commencement of action

(a) If a franchisor fails to comply with

the requirements of section 2802 or 2803 of

this title, the franchisee may maintain a

civil action against such franchisor. Such

action may be brought, without regard to

the amount in controversy, in the district

court of the United States in any judicial

district in which the principal place of

business of such franchisor is located or

in which such franchisee is doing business,

except that no such action may be main-

tained unless commenced within 1 year after

the later of --

APP-35

(1) the date of termination of the

franchise or nonrenewal of the fran-

chise relationship; or

(2) the date the franchisor fails

to comply with the requirements of

section 2802 or 2803 of this title.

Equitable relief by court; bond

requirements; grounds for nonexercise

of court's equitable powers

(b)(1) In any action under subsection

(a) of this section, the court shall grant

such equitable relief as the court deter-

mines is necessary to remedy the effects of

any failure to comply with the requirements

of section 2802 or 2803 of this title, in-

Cluding declaratory judgment, mandatory or

prohibitive injunction relief, and interim

equitable relief.

(2) Except as provided in paragraph (3),

in any action under subsection (a) of this

section, the court shall grant a prelimi-

nary injunction if --

(A) the franchisee shows --

(i) the franchise of which he

is a party has been terminated or

the franchise relationship of

which he is a party has not been

renewed, and

(ii) there exists sufficiently

serious questions going to the

merits to make such questions a

fair ground for litigation; and

(B) the court determines that, on

balance, the hardships imposed upon

such franchisee if such preliminary

injunctive relief were not granted.

APP-36

(3) Nothing in this subsection prevents

any court from requiring the franchisee in

any action under subsection (a) of this

section to post a bond, in an amount estab-

lished by the court, prior to the issuance

or continuation of any equitable relief.

(4) In any action under subsection (a)

of this section, the court need not exer-

cise its equity powers to compel continua-

tion or renewal of the franchise relation-

ship if such action was commenced --

(A) more than 90 days after the date

on which notification pursuant to sec-

tion 2804(a) of this title was posted

or personally delivered to the fran-

chisee;

(B) more than 180 days after the

date on which notification pursuant to

section 2804(b)(2) of this title was

posted or personally delivered tc the

franchisee; or

on which the termination of such fran-

chise or the nonrenewal of such fran-

chise relationship takes effect if

less than 90 days notification was

provided pursuant to section

2804(b) (1) of this title.

Burden of proof; burden of going

forward with evidence

of this section, the franchisee shall have

the burden of proving the termination of

the franchise or the nonrenewal of the

franchise relationship. The franchisor

shall bear the burden of going forward with

evidence to establish as an affirmative

defense that such termination or nonrenewal

was permitted under section 2802(b) or 2803

of this title, and, if applicable, that

APP-37

such franchisor complied with the require-

ments of section 2802(d) of this title.

Actual and exemplary damages and

attorney and expert witness fees

to franchisee; determination by court

of right to exemplary damages and amount;

attorney and expert witness fees

to franchisor for frivolous actions

(d)(1) If the franchisee prevails in any

action under subsection (a) of this sec-

tion, such franchisee shall be entitled --

(A) consistent with the Federal

Rules of Civil Procedure, to actual

damages;

(B) in the case of any such action

which is based upon conduct of the

franchisor which was in willful dis--

regard of the requirements of section

2802 or 2803 of this title, or the

rights of the franchisee thereunder,

to exemplary damages, where appropri-

ate; and

pert witness fees to be paid by the

franchisor, unless the court deter-

mines that only nominal damages are to

be awarded to such franchisee, in

which case the court, in its discre-

tion, need not direct that such fees

be paid by the franchisor.

(2) The question of whether to award ex-

emplary damages and the amount of any such

award shall be determined by the court and

not by a jury.

(3) In any action under subsection (a)

of this section, the court may, in its dis-

cretion, direct that reasonable attorney

and expert witness fees be paid by the

APP-38

franchisee if the court finds that such

action is frivolous.

Discretionary power of court to compel

continuation or renewal of franchise

relationship; grounds for noncompulsion;

right of franchisee to actual damages and

attorney and expert witness fees unaffected

(e)(1) In any action under subsection

(a) of this section with respect to a fail-

ure of a franchisor to renew a franchise

relationship in compliance with the requir-

ements of section 2802 of this title, the

court may not compel a continuation or re-

newal of the franchise relationship if the

franchisor demonstrates to the satisfaction

of the court that --

(A) the basis for such nonrenewal is

a determination made by the franchisor

in good faith and in the normal course

of business --

(i) to convert the leased mar-

keting premises to a use other

than the sale or distribution of

motor fuel,

(ii) to materially alter, add

to, or replace such premises,

(iii) to sell such premises,

(iv) to withdraw from the mar-

keting of motor fuel through re-

tail outlets in the relevant geo-

graphic market area in which the

marketing premises are located,

(v) that renewal of the fran-

chise relationship is likely to

be uneconomical to the franchisor

despite any reasonable changes or

reasonable additions to the pro-

APP-39

visions of the franchise which

may be acceptable to the fran-

chisee; and

(B) the requirements of section

2804 of this title have been complied with.

(2) The provisions of paragraph (1)

shall not affect any right of any franchi-

see to recover actual damages and reasona-

ble attorney and expert witness fees under

subsection (d) of this section if such non-

renewal is prohibited by section 2802 of

this article.

§ 2806. Relationship of statutory provi-

sions to State and local laws

(a) to the extent that any provision of

this subchapter applies to the termination

(or the furnishing of notification with

respect thereto) of any franchise, or to

the nonrenewal (or the furnishing of noti-

fication with respect thereto) of any fran-

chise relationship, no State or any politi-

cal subdivision thereof may adopt, enforce,

or continue in effect any provision of any

law or regulation (including any remedy or

penalty applicable to any violation there-

of) with respect to termination (or the

furnishing of notification with respect

thereto) of any such franchise or to the

nonrenewal (or the furnishing of notifica-

tion with respect thereto) of any such

franchise relationship unless such provi-

sion of such law or regulation is the same

as the applicable provision of this sub-

chapter.

(b) Nothing in this subchapter author-

izes any transfer or assignment of any

franchise or prohibits any transfer or as-

signment of any franchise as authorized by

the provisions of such franchise or by any

applicable provision of State law which

permits such transfer or assignment without

APP-40

regard to any provision of the franchise.

APP-41

APPENDIZ E

Article 6, cl. 2

This Constitution and the Laws of the

United States which shall be made in Pur-

suance thereof; and all Treaties made, or

which shall be made, under the Authority of

the United States shall be the supreme Law

of the Land; and the Judges in every State

shall be bound thereby, Anything in the

Constitution or Laws of any State to the

Contrary notwithstanding.

APPENDIZ F

§ 1441. Actions removable generally

(a) Except as otherwise expressly provided

by Act of Congress, any civil action

brought in a State court of which the dis-

trict courts of the United States have ori-

ginal jurisdiction, may be removed by the

defendant or the defendants, to the dis-

trict court of the United States for the

district and division embracing the place

where such action is pending.

(b) Any civil action of which the district

courts have original jurisdiction founded

on a Claim or right arising under the Con-

stitution, treaties or laws of the United

States shall be removable without regard to

the citizenship or residence of the par- .

ties. Any other such action shall be remo-

vable only if none of the parties in inter-

est properly joined and served as defen-

dants is a citizen of the State in which

such action is brought.

claim or cause of action, which would be

removable if sued upon alone, is joined

with one or more otherwise nonremovable

Claims or causes of action, the entire case

may be removed and the district court may

determine all issues therein, or, in its

discretion, may remand all matters not

otherwise within its original jurisdiction.

(d) Any civil action brought in a State

court against a foreign state as defined in

section 1603(a) of this title may be

removed by the foreign state to the dis-

trict court of the United States for the

district and division embracing the place

where such action is pending. Upon removal

the action shall be tried by the court

without jury. Where removal is based upon

this subsection, the time limitations of

APP-43

section 1446(b) of this chapter may be en-

larged at any time for cause shown.

removed is not precluded from hearing and

determining any claim in such civil action

because the State court from which such

civil action is removed did not have juris-

diction over that clain.

APPENDIZ G

Article I, Sec. 8. [Powers of Congress. }

{[1.] The Congress shall have Power To lay

and collect Taxes, Duties, Imposts and Ex-

cises, to pay the Debts and provide for the

common Defence and general Welfare of the

United States; but all Duties, Imposts and

Excises shall be uniform throughout the

United States.

[2.] To borrow money on the credit of the

United States.

[3.] To regulate commerce with foreign na-

tions, and among the several States, and

with the Indian tribes.

[4.] To establish an uniform Rule of Natur-

alization, and uniform Laws on the subject

of Bankruptcies throughout the United

States.

[5.] To coin Money, regulate the Value

thereof, and of foreign Coin, and fix the

Standard of Weights and Measures.

[6.] To provide for the Punishment of coun-

terfeiting the Securities and current Coin

of the United States.

[7.] To establish Post Offices and post

Roads.

[8.] To promote the Progress of Science and

useful Arts, by securing for limited Times

to Authors and Inventors the exclusive

Right to their respective Writings and Dis-

coveries.

[9.] To constitute tribunals inferior to

the Supreme Court.

APP-45

[10.}) To define and punish Piracies and

Felonies committed on the high Seas, and

Offences against the Law of Nations.

[11.] To declare War, grant Letters of

Marque and Reprisal, and make Rules con-

cerning Captures on Land and Water.

a oer |

[12.] To raise and support Armies, but no

Appropriation of Money to that Use shall be

for a longer Term than two Years.

[13.] To provide and maintain a Navy.

[14.]) To make Rules for the Government and

Regulation of the land and naval Forces.

[15.] To provide for calling forth the

Militia to execute the Laws of the Union,

suppress Insurrection and repel Invasions.

[16.] To provide for organizing, arming,

and disciplining the Militia, and for gov-

erning such Part of them as may be employed

in the Service of the United States, re-

serving to the States respectively, the

Appointment of the Officers, and the Au-

thority of training the Militia according

to the discipline prescribed by Congress.

[17.] To exercise exclusive Legislation in

all Cases whatsoever, over such District

(not exceeding ten Miles square) as may, by

Cession of particular States, and the Ac-

ceptance of Congress, become the Seat of

the Government of the United States, and to

exercise like Authority over all Places

purchased by the Consent of the Legislature

of the State in which the Same shall be,

for the Erection of Forts, Magazines,

Arsenals, Dock-Yards, and other needful

Buildings, And,

[18.] To make all Laws which shall be nec-

essary and proper for carrying into Execu-

tion the foregoing Powers, and all other

APP-46

Powers vested by this Constitution in the

Government of the United States, or in any

Department or Officer thereof.

APP-47

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.