Opposition Brief — Samaan v. Niakan

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No. 88-577 ie ae

JOSEPH E_SPANIOL, JR.

CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

ISSA ELIAS SAMAAN,

Petitioner,

VS.

F. NIAKAN, E. NIAKAN, BEN NIAKAN,

BOB NIAKAN, BETTY NIAKAN, and

UNION OIL COMPANY OF CALIFORNIA

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE COURT OF APPEAL OF CALIFORNIA

SECOND APPELLATE DISTRICT, DIVISION FIVE

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

ROBERT S. BESSER *

CHRISTOPHER CHAPIN

MARGOLIS, RYAN, BURRILL & BESSER

Suite 300

520 Broadway Street

Santa Monica, California 90401

(213) 395-3996

Attorneys for Respondent,

Union Oil Company Of California

*Counsel of Record

Lawyers Brief Service / Legal Printers / (213) 383-4457 / (714) 720-1510

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QUESTIONS PRESENTED

Should the Court review a California intermediate appellate

court decision holding that federal courts have exclusive

jurisdiction over claims under the Petroleum Marketing

Practices Act (““PMPA”), 15 U.S.C. § 2801 et seq., where:

(1) The decision conflicts with no federal circuit court

holding, nor any holding of a state court of last resort and

raises no substantial federal issue;

(2) The only conflicting analysis, endorsed by petitioner, is

by an intermediate Pennsylvania court, has never been fol-

lowed by any other court, and may disappear because the

highest court of Pennsylvania has decided to review it;

(3) Reversal of the decision would not even be dispositive

between the parties because the trial court correctly held as a

matter of law that respondent did not violate the PMPA; and

(4) This Court recently denied a Petition for Writ of

Certiorari brought on the identical issue.

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TABLE OF CONTENTS

Page

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INTRODUCTION AND SUMMARY OF ARGUMENT ... .1

SME UES GASES ok ccc cc wee eenses 2

REASONS FOR DENYING THE WRIT................ 4

I. THIS CASE DOES NOT MEET THE

CRITERIA FOR CERTIORARI................ 4

Il. THERE IS NO SUBSTANTIAL FEDERAL

MMS os oc geo ksh 0 ce ces eee es 6

A. Federal Court Jurisdiction Over PMPA

re 6

B. State Courts May Not Grant Affirmative

Relief Based on Claims for Which Federal

De 7

C. The Preemptive Provisions of the PMPA

Are Clear and Have Been Widely Held to

Preempt All of Samaan’s State Causes of

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TABLE OF AUTHORITIES

Cases

Adams v. lowa Oil Co.

Bus. Fran. Guide (CCH), § 8008

SCH a a eg se aioe

Andrea Theatres, Inc. v. Theatre Confections, Inc.

ete oo Ok oe 2 ene Perr err

Arco Petroleum Products Co. v. Williams

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

Bates v. Chevron

(Ga. App. 1979) 260 S.E.2d 367...............

Central States, etc. v. Old Security Life Insurance Co.

os ey NPD 6 oa e'o cds eae eeeda

Consumer’ s Pet. of Conn.

(Conn. Super. 1982) 452 A.2d 123 .............

Continental Enterprises v. American Oil Co.

(W.D. Miss. 1986) 628 F.Supp. 126............

DaCosta’s Automotive, Inc. v. Birchwood

Plaza Shell, Inc.

Ee Oe. RA ORE CNP 66 ed ncencverneosadne

Davis. Gulf Oil Corp.

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

Page

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ERA Enterprises, Inc. v. Gulf Oil Corp

(La. App. 1967) 306.30.26 160... cc eenvees

Frankard v. Amoco Oil

(Wis. App. 1983) 342 N.W.2d 247 ............

General Investment Co. v. Lake Shore

and Michigan Railroad

y BIS ie eG: Se errr errr ye or

Huth v. B.P. Oil, Inc.

(D.C. Maryland 1983) 555 F.Supp. 191.........

Johnson v. Mobil Oil Corp.

528 A.2d 155 (Pa. Super. 1987) review granted

544 A.2d 445 (Pa. July 18, 1988) .............

Kreisher v. Mobil Oil Corporation

(Supreme Court, No. SE-195) 2... 52s ccassccess

Mobil Oil Corp. v. Superior Court of the

County of Santa Clara

189 Cal. App.3d 485 (1987) .......... 0000 ee.

Niakan v. Samaan

199 Cal.App.3d 716 (1988)............. 0008.

Ricco v. Shell Oil Co.

(N.J. Super. 1981) 434 A.2d 1151.............

Rustom v. Atlantic Richfield Co.

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

ix om

Page

Siecko v. Amerada Hess Corporation

(Ea. FO, ISGS) Fae Sa Po ok ocd en keneeses 8

Ted's Tire Service v. Chevron

(DO. Comm. 5979) SA PU. BGS o0.ck vc estucaebenees 8

Thomas v. Amoco Oil Co.

(La. App. 1984) 455 So.2d 1187, rev. denied

SGU DO. Olde 66 ib 83005020600 bene

Valenzuela v. Kraft, Inc

to 1] BB. hs fe 2: eee ee RA

Walters v. Chevron U.S.A., Inc

(Ga. App. 1960) 269 S.B.24 49S 2. ww ccc cc ccc cw ccce cd

Statutes

Petroleum Marketing Practices Act:

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1S UDA. G aee o 6eneee 60008 shan see 8

Rules

Federal Rules of Civil Procedure

ND Gaba voc cs 6400600 Re a6 40 ees 6,7

United States Supreme Court Rule 17.1(b) .............. 4

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Page

Legislative Reports

H.R. Rep. No. 95-161, 95th Cong. Ist Sess. 14 (1978) ..... 7

S.Rep. No. 95-731, 95th Cong. 2d Sess., reprinted in,

1978 U.S. Code Cong. & Ad. News at 874 ..........-. 6

No. 88-577

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1988

ISSA ELIAS SAMAAN,

Petitioner,

VS.

F. NIAKAN, E. NIAKAN, BEN NIAKAN,

BOB NIAKAN, BETTY NIAKAN, and

UNION OIL COMPANY OF CALIFORNIA

Respondents.

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

INTRODUCTION AND SUMMARY OF ARGUMENT

This Covrt has recently considered and rejected a

Petition for Writ of Certiorari raising the issue of

whether federal jurisdiction over PMPA claims is ex-

clusive. (Kreisher v. Mobil Oil Corporation, Supreme

Court of the United States, No. 88-195). This Petition

includes no different grounds for review of this issue.

Despite Petitioner’s numerous, and in many instances

misleading, citations to cases, he has failed to estabiish

that there is anything for this Court to review: An

intermediate California court followed a well-reasoned

aa i al

-

federal district court decision; no circuit court has

addressed the issue; and no “state court of last resort”

has addressed the issue.

STATEMENT OF THE CASE

This is an action between a service station franchisee,

Petitioner Issa Elias Samaan (“Samaan’’); the owners of

the service station property, Respondents F. Niakan, E.

Niakan, Ben Niakan, Bob Niakan and Betty Niakan

(“Niakan”); and a petroleum marketing franchisor,

Union Oil Company of California (“Union”).’

The action was originally commenced by Niakan for

the purpose of seeking a declaration that Samaan had no

further interest in the service station premises after

September 30, 1983, the date upon which Samaan’s

franchise expired by its terms. In response to the com-

plaint, Samaan cross-complained against Niakan, Union

and the prior owners of the property (the “Sheffields’’)

alleging that by virtue of the federal Petroleum Market-

ing Practices Act, 15 U.S.C. §2801 et seq. (“PMPA”), he

had a right to occupy the premises after the expiration of

his franchise.

The gravamen of Samaan’s causes of action against

Union is that Union wrongfully failed to renew

Samaan’s franchise because it relinquished its rights to

the leasehold estate upon which the franchised station

was located.

The First Cause of Action of Samaan’s Second

Amended Cross-Complaint is against Union for wrong-

ful nonrenewal of his franchise under the PMPA. The

Second Cause of Action is for declaratory relief against

]

Union Oil Company of California is a fictitious business name of

Unocal Corporation. Its only non-wholly owned subsidiary is Union

Exploration Partners, Ltd.

ee

+. 2

all defendants, but Samaan dismissed this Cause of

Action with prejudice at the conclusion of trial. The

Third, Fourth and Fifth Causes of Action are against

Union for alleged violations of the California Investment

Law and the California Unfair Trade Practices Act.

Samaan’s Sixth Cause of Action is against Union for

breach of the implied covenant of good faith and fair

dealing; and the Seventh Cause of Action for breach of

contract. Finally, the Eighth Cause of Action is against

Union for misrepresentation. However, all causes of

action are centered upon the alleged wrongful failure to

renew Samaan’s franchise.

Samaan appealed from the judgment entered in favor

of Union on the First, Fifth, Sixth, Seventh and Eighth

Causes of Action of the Second Amended Cross-

Complaint. Samaan abandoned any claim as to the

judgment for Union on the Third and Fourth Causes of

Action of the Cross-Complaint, apparently conceding the

correctness of the Court’s ruling.

Subsequent to the entry of the trial court’s judgment,

the United States District Court for the Central District

of California held that federal courts have exclusive

jurisdiction over claims brought under the PMPA.

Based upon this decision, Union urged, in response to

Samaan’s appeal, that the California state courts lack

jurisdiction over PMPA claims. The California Court of

Appeal agreed.

Samaan then sought review in the California Supreme

Court. The California Supreme Court denied review on

May 4, 1988.

Samaan requested and was granted two extensions of

time within which to file his Petition for Writ of Cer-

tiorari in this Court, which was ultimately timely filed.

YP

REASONS FOR DENYING THE WRIT

I. THIS CASE DOES NOT MEET THE

CRITERIA FOR CERTIORARI.

Samaan asserts that review is appropriate because

there is a “conflict between state courts on a federal

issue.” Petition at 3. However, Samaan fails to estab-

lish the required conflict.

Supreme Court Rule 17, which defines the

“considerations governing review on certiorari,” states

that “certiorari may be proper” when a state court of last

resort has decided a federal question in a way in conflict

with the decision of another state court of last resort or

of a federal court of appeals.” Rule 17.1(b) (emphasis

added).

The jurisdictional issue here has not been addressed

by a “state court of last resort,” in this case or any other.

Nor has the issue been addressed by a single “federal

court of appeals.” Indeed, the thrust of Samaan’s Peti-

tion is that the decision below agrees with a decision of

a California federal district court, rather than with the

decision of a Pennsylvania intermediate appellate court.

Compare, Rustom v. Atlantic Richfield Co., 618 F.Supp.

210 (C.D. Cal. 1985) with Johnson v. Mobil Oil Corp.,

528 A.2d 155, 163-64, (Pa. Super. 1987).

In an attempt to bolster his claim of conflict, Samaan

cites eleven state court cases for the proposition that

“every published state court PMPA opinion has found or

assumed concurrent jurisdiction. . .” Petition at 38.

In fact, the first case (Adams v. lowa Oil Co., Bus.

Fran. Guide (CCH), § 8008 (Iowa S. Ct. 1983) is not a

published opinion; five of the opinions [Davis. Gulf Oil

Corp. (D.C. App. 1984) 485 A.2d 160, Arco Petroleum

Products Co. v. Williams (1986) 146 Ill.App.3d 218, 496

N.E.2d 1098, Bates v. Chevron (Ga. App. 1979) 260

7

S.E.2d 367, Walters v. Chevron U.S.A., Inc. (Ga. App.

1980) 269 S.E.2d 495, and Consumer’s Pet. of Conn.

(Conn. Super. 1982) 452 A.2d 123] merely deal with

PMPA claims as affirmative defenses to an eviction

action; two of the opinions [Frankard v. Amoco Oil

(Wis. App. 1983) 342 N.W.2d 247 and ERA Enterprises,

Inc. v. Gulf Oil Corp (La. App. 1987) 506 So.2d 160]

were common law actions that did not address PMPA

jurisdiction because the PMPA was only incidentally

involved and no affirmative PMPA claim was made; two

of the opinions [DaCosta’s Automotive, Inc. Vv.

Birchwood Plaza Shell, Inc. (1984) 482 N.Y.S.2d 832

and Ricco v. Shell Oil Co. (N.J. Super. 1981) 434 A.2d

1151] reject the PMPA claims as a matter of substantive

law with no discussion of jurisdiction; and one opinion

[Thomas v. Amoco Oil Co. (La. App. 1984) 455 So.2d

1187, rev. denied 460 So.2d 612] simply holds that the

PMPA does not apply because there has been no ter-

mination of a franchise agreement.

Furthermore, the Johnson case, on which Samaan

heavily relies, is not final: The Pennsylvania Supreme

Court has granted review of the jurisdiction issue. See

Johnson v. Mobil Oil Corp., 544 A.2d 445 (Pa. July 18,

1988).

Thus, the best that can be said for Samaan’s analysis

is that there is a possibility of a future conflict that might

at some unknown time be appropriate for this Court to

address.

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<i.

Il. THERE IS NO SUBSTANTIAL

FEDERAL ISSUE TO RESOLVE.”

A. Federal Court Jurisdiction Over

PMPA Claims is Exclusive.

The PMPA provides that parties may seek redress for

violations of the PMPA “in the district court of the

United States in any judicial district in which the princi-

pal place of business of such franchisor is located or in

which such franchisee is doing business ...” 15 U.S.C.

§ 2805(a). The PMPA goes on to incorporate federal

procedural standards, stating that damages are available

“consistent with the Federal Rules of Civil Procedure,”

and applying Rule 65 standards for the issuance of

injunctions. 15 U.S.C. §§ 2805(d)(1)(A), 2805(b)(2).

Thus, the plain terms of the statute contemplate federal,

not State, jurisdiction over PMPA claims.

As the Rustom court points out, there are strong

indications in the legislative history of the PMPA as well

as in the provisions of the Act itself which provide the

“unmistakable implication” of Congressional intent that

federal courts have exclusive jurisdiction over actions

brought under the PMPA. (618 F.Supp. at 212)

There is a conspicuous absence, in both the Senate

and House Reports, of reference to the bringing of a

PMPA claim in state 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.,

2 Samaan also requests review of the substantive rulings of the

trial court. Samaan’s arguments were firmly rejected by the Court of

Appeal: “We have read the record .. . There is substantial evidence

to support the trial court’s directed verdict, and Appellant’s other

contentions are meritless.” Niakan v. Samaan (1988) 199 Cal.App.3d

716, 720 fn. 3.

cia

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reprinted in, 1978 U.S. Code Cong. & Ad. News at 874;

H.R. Rep. No. 95-161, 95th Cong. Ist Sess. 14 (1978).

As the Ninth Circuit reasoned in Valenzuela v. Kraft,

Inc. (9th Cir. 1984) 739 F.2d 434, 436,

“Although not determinative, the absence of

reference to the state courts combined with

Congress’ affirmative references to the federal

courts, suggests an intent to make federal jurisdic-

tion exclusive.”

The Valenzuela court based its holding on references

in the legislative history only to the maintenance of an

action in federal court and the incorporation of the

standards of Fed.R.Civ.P. 65 applied to the issuance of

preliminary injunctions.

This Court has held that federal courts have exclusive

jurisdiction over actions under the Sherman and Clayton

Acts, although those statutes provide only that actions

may be brought in federal courts. General Investment

Co. v. Lake Shore and Michigan Railroad (1922) 260

U.S. 261, 286-287.

In summary, the PMPA is a federal act applying

federal remedies, extensively interpreted by federal

courts. Jurisdiction, therefore, properly belongs exclu-

sively in federal court.

B. State Courts May Not Grant

Affirmative Relief Based on

Claims for Which Federal Juris-

diction is Exclusive.

Although state courts may properly consider claims,

over which federal jurisdiction is exclusive, which are

raised collaterally or defensively, state courts may not

grant affirmative relief thereon. Andrea Theatres, Inc. v.

Theatre Confections, Inc. (2d Cir. 1986) 787 F.2d 59;

.

Central States, etc. v. Old Security Life Insurance Co.

(7th Cir, 1979) 600 F.2d 671, 676.

Even a defendant prevailing on such federal defenses

in state court would still have to return to federal court

to seek affirmative relief. Andrea Theatres, supra., at

63.

Samaan’s claims were raised in a cross-complaint

against Union and sought affirmative relief in the form

of a permanent injunction and damages. Such claims

can hardly be said to have been raised defensively.

C. The Preemptive Provisions of the

PMPA Are Clear and Have Been

Widely Held to Preempt Ali of

Samaan’s State Causes of Action.

Noticeably absent from Samaan’s argument on the

preemption issue is any reference to the many decisions,

including one recent California Court of Appeal decision

(fully briefed by Union below), which interpret the

scope of 15 U.S.C. § 2806, the section of the PMPA

which provides for preemption of any inconsistent state

law or regulation. See, e.g., Mobil Oil Corp. v. Superior

Court of the County of Santa Clara (1987) 189 Cal.

App.3d 485 (PMPA preempts common law actions that

are in reality actions for wrongful termination); Ted's

Tire Service v. Chevron (D. Conn. 1979) 470 F.Supp.

163 (PMPA preempts inconsistent state law); Huth v.

B.P. Oil, Inc. (D.C. Maryland 1983) 555 F.Supp. 191

(PMPA preempts common law actions for breach of

contract and fraud); Continental Enterprises v. American

Oil Co. (W.D. Miss. 1986) 628 F.Supp. 126 (PMPA

preempts contract action as well as actions for tortious

interference and fraud); Siecko v. Amerada Hess

Corporation (E.D. Pa. 1983) 569 F.Supp. 768 (PMPA

preempts action for breach of fiduciary duty).

mv

The trial court correctly found, based on ample legal

authority, that Samaan’s state causes of action were

preempted by the PMPA.

CONCLUSION

For the reasons stated, the Petition should be denied.

Respectfully submitted,

ROBERT S. BESSER

CHRISTOPHER CHAPIN

MARGOLIS, RYAN,

BURRILL & BESSER

Attorneys for Respondent,

Union Oil Company Of

California