# Petition for Writ of Certiorari — Samaan v. Niakan > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0229%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1988 - **Citation:** 488 U.S. 986 ## Text 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. ii 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. iv APP-13 APP-14 APP-41 APP-42 APP-44 Cases: e 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 vi 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 41 51 59 41 52 49 54 51 22 34 706 (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, 7 554 F. Supp. 199 (D. Conn. 1982) ... Niakan v. Samaan, 199 Cal. App. 3d 716, 245 Cal. Rptr. 34 (1988) .. 7, 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 — . * > . + — Y 154 Ga. App. 636, 269 S.E.2d 495 (1980) viii 55 55 30 51 52 55 39 35 54 21, 51 31 38 31 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) 15 15 aS 15 15 15 15 15 15 15 15 15 15 15 15 i5 28 28 U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. U.S.C. an 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 a ; 16 a » 1, 2d . 16, 57 a 25 21, 22, 20 25, 54 . — 22 ’ 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 29 36 19 20 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. 4 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. 10 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- 11 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- 12 (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, 13 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). 14 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. 15 288, 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," 16 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. 17 _—— 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. 18 > 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. 19 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. 20 ee | 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- 21 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." 22 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 23 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. 24 es . + * 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). 25 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- 26 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 27 . « « 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 28 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 30 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.") aa 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.) 32 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 33 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 © The California Court of Appeal also 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). 34 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 35 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. —_——— 36 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 37 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, 38 342 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- 39 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 40 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 41 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- 42 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). 43 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] 44 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- 45 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 46 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": 47 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 48 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 49 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. ) 50 j 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 a 528 A.2d at 162 (emphasis added). As observed in Bellmore, PMPA was 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; (C) the initial term of which 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 (C) the effective date of 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 (c) If the notification requirements of 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 (c) Notification under this section -- (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 (C) the summary statement pre- pared under subsection (d) of this section. APP-34 0 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 (C) more than 30 days after the date 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 (c) In any action under subsection (a) 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 (C) to reasonable attorney and ex- 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, or (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. (c) Whenever a separate and independent 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. (c) The court to which such civil action is 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0229%3A1. Public record. Not legal advice.