643 F.3d 1
1st Cir.2011Background
- Esso operated Esso-brand gasoline stations in Puerto Rico for over a century; many stations were run by independent franchisees under Esso branding.
- In March 2008 Esso decided to withdraw from Puerto Rico and sell assets to Total Petroleum Puerto Rico Corporation, terminating franchise relationships effective Sep. 30, 2008.
- Total offered a standard franchise contract to former Esso dealers; some plaintiffs accepted, others negotiated or rejected.
- Plaintiffs filed PMPA claims seeking injunctive relief and damages for alleged noncompliance with PMPA §2802 and related provisions.
- A magistrate judge conducted bench trials, finding substantial PMPA compliance but invalidating certain contract terms as unenforceable under Puerto Rico law; severability clauses preserved the remainder.
- District court entered judgment for Esso and Total; plaintiffs appealed challenging the good-faith offer and the treatment of terms violating state law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Total's offer comply with PMPA §2802(b)(2)(E)(iii)(II)? | Santiago-Sepúlveda argued Total offered discriminatory terms. | Esso argued terms varied for legitimate business reasons and were generally non-discriminatory. | No per se discrimination; good-faith inquiry under PMPA. |
| Was Total's offer made in good faith under PMPA? | Total retaliated against maneuvering by state-law violations in some terms. | Total reasonably believed terms were non-discriminatory and customary for renewals. | Assumed good faith; no evidence of intent to force rejection. |
| Can state-law defects in some terms defeat the entire contract under PMPA? | Any term violating state law invalidates the entire offer. | Severability provisions allow invalid terms to be excised without voiding the whole contract. | Severance clause permits partial invalidation; contract remains viable. |
| Did the PMPA limited remedies preclude damages for state-law violations? | Damages available under PMPA for violations. | PMPA damages are limited to specified PMPA provisions; state-law violations yield no damages. | Damages/fees denied for state-law violations; PMPA damages not shown. |
Key Cases Cited
- Chestnut Hill Gulf, Inc. v. Cumberland Farms, Inc., 940 F.2d 744 (1st Cir. 1991) (PMPA framework and dealer-protection rationale)
- Mac's Shell Serv., Inc. v. Shell Oil Prods. Co., 130 S. Ct. 1251 (U.S. 2010) (PMPA content limits and relation to state law)
- Esso Standard Oil Co. (P.R.) v. Monroig-Zayas, 445 F.3d 13 (1st Cir. 2006) (definition of good faith under PMPA context)
- Esso Standard Oil Co. v. Department of Consumer Affairs, 793 F.2d 431 (1st Cir. 1986) (interpretation of good faith and non-discriminatory behavior)
- Dersch Energies, Inc. v. Shell Oil Co., 314 F.3d 846 (7th Cir. 2002) (PMPA-state law interaction and remedies)