Sunoco, Inc. (R & M) v. Toledo Edison Co.
129 Ohio St. 3d 397
Ohio2011Background
- Sunoco, Inc. (R&M) and BP Oil Co. each had 1996 electric-service contracts with Toledo Edison; Sunoco’s 1999 agreement was a PUCO-approved special contract with below-tariff pricing.
- Both Sunoco and BP included identical most-favored-nation (MFN) clauses titled “Comparable Facility Price Protection,” allowing use of any favorable arrangements from Toledo Edison for their facilities.
- SB 3 electric restructuring led to plans (ETP, RSP, RCP) permitting extensions of pre-S.B. 3 special contracts; BP extended to December 31, 2008 under these processes, while Sunoco’s Sunoco Agreement extended differently.
- In 2007, Toledo Edison informed Sunoco its Sunoco Agreement would end February 2008; Sunoco sought to extend to December 31, 2008 using the MFN clause, BP had already extended.
- PUCO denied Sunoco’s request, ruling MFN only protected price terms, not contract duration; Sunoco appealed, arguing MFN allows extension of term to BP’s duration; the Ohio Court of Appeals reversed the PUCO on several propositions in Sunoco’s favor.
- Dissenting opinions argued MFN should not extend contract duration and relied on different interpretive analyses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does MFN allow extending Sunoco’s contract duration to BP’s duration? | Sunoco (Sunoco) | Toledo Edison (the Company) | Yes; MFN includes nonprice terms like duration; Sunoco may extend |
| Did PUCO improperly rely on clause headings to interpret MFN? | Sunoco | Toledo Edison/PUCO | No; the heading was not controlling (preserved issue) |
| What does ‘arrangement’ mean in MFN—does it include contract duration? | Sunoco | Toledo Edison | Yes; arrangement includes nonprice terms, including duration |
| Can extrinsic evidence be used to interpret MFN here? | Sunoco | BP/Toledo Edison | No; extrinsic evidence not allowed where contract language is clear, but court found proper interpretation of MFN language |
| Did Sunoco collateral attack PUCO decisions in RSP/RCP by invoking MFN? | Sunoco | PUCO/Toledo Edison | Sunoco’s challenge centered on MFN rights, not collateral attacks; court rejected improper reliance on extrinsic matters |
Key Cases Cited
- Eveleth Taconite Co. v. Minnesota Power & Light Co., 221 N.W.2d 157 (Minn. 1974) (MFN terms distinct from contract term; term cannot be extended via MFN)
- Baker Car & Truck Rental, Inc. v. Little Rock, 925 S.W.2d 780 (Ark. 1996) (MFN contracts generally end on termination date absent contract language extending term)
- Waterloo Furniture Components, Ltd. v. Haworth, Inc., 467 F.3d 641 (7th Cir. 2006) (MFN clause generally does not extend contract past its express termination)
- Shifrin v. Forest City Ents., Inc., 64 Ohio St.3d 635 (1992) (Extrinsic evidence rarely allowed when contract language is clear)