Emmanuel JOSEPH, Plaintiff-Appellant, v. SASAFRASNET, LLC, a Wisconsin limited liability company, Defendant-Appellee.
No. 11-2065.
United States Court of Appeals, Seventh Circuit.
Argued Oct. 26, 2011. Decided July 26, 2012.
689 F.3d 683
This complaint should have been screened before the end of September 2011. The district court must complete that task swiftly. On the day our mandate is received, the judge must authorize service of process on all defendants involved in the treatment of Wheeler‘s hemorrhoids. The court must give these defendants a short time to respond to the motion for a preliminary injunction and promptly conduct an evidentiary hearing to determine whether Wheeler is entitled to relief. Because the hearing may require evidence from medical experts, the district judge should give serious consideration to recruiting counsel to assist Wheeler. See Pruitt v. Mote, 503 F.3d 647 (7th Cir.2007) (en banc).
Wheeler did himself no favors by filing a complaint naming 36 defendants, several of whom (including the current and immediate past governors of Illinois) have no conceivable relation to his medical care. The more claims and defendants in a complaint, the longer screening will take. The more frivolous claims in a complaint, the more a judge is apt to infer (if only subconsciously) that the plaintiff is crying wolf with respect to all of the claims.
The judge might have been justified in directing Wheeler to file separate complaints, each confined to one group of injuries and defendants. A litigant cannot throw all of his grievances, against dozens of different parties, into one stewpot. Joinder that requires the inclusion of extra parties is limited to claims arising from the same transaction or series of related transactions. See
The order under review is vacated, and the case is remanded with directions to proceed according to this opinion. The mandate will issue today.
Before RIPPLE and HAMILTON, Circuit Judges, and MYERSCOUGH, District Judge.*
RIPPLE, Circuit Judge.
Emmanuel Joseph operates a British Petroleum service station franchise in Chicago, Illinois. Sasafrasnet, LLC, is Mr. Joseph‘s franchisor. On November 1, 2010, Sasafrasnet provided Mr. Joseph with written notification that the franchise agreement would terminate in ninety days. Mr. Joseph then initiated this action in which he alleges that Sasafrasnet‘s termination of his franchise would violate the Petroleum Marketing Practices Act (“PMPA” or the “Act“),
I
BACKGROUND
A. Facts
Although Mr. Joseph and Sasafrasnet are the current parties to the franchise agreement, neither originally was involved with the station at issue. BP Products North America, Inc. (“BP Products“) was the station‘s original franchisor. BP Products also owned the station‘s premises. Mr. Joseph purchased the franchise from the previous franchisee in May 2006 for $400,000. In conjunction with this purchase, Mr. Joseph entered into a Dealer Lease and Supply Agreement (“DLSA“) with BP Products.3 In March 2009, Sasafrasnet purchased BP Products‘s interest in the land and assumed its obligations under the DLSA, thereby becoming Mr. Joseph‘s lessor and franchisor.5
The DLSA functions both as a lease agreement and as a supply contract. It sets a monthly rent for the premises and contemplates that Mr. Joseph will “act as a reseller of BP‘s trademarked motor fuels, motor oils and other products to the motoring public.”4 Sasafrasnet is required to “deliver branded motor fuels to” the station.6 Mr. Joseph, in turn, is obligated to establish an account with a financial institution, on terms acceptable to [Sasafrasnet], that provides [electronic funds transfer (“EFT“)] services and to authorize [Sasafrasnet] to initiate certain transfers of funds between that account and designated accounts of [Sasafrasnet] for payment of any and all amounts due to [Sasafrasnet] under [the DLSA].7
Sasafrasnet is not obligated to extend credit to Mr. Joseph. However, the DLSA indicates that Sasafrasnet would do so if Mr. Joseph submitted a $40,000 deposit. Although Mr. Joseph had only deposited $10,000,9 Sasafrasnet did in fact deliver fuel to Mr. Joseph‘s station before collecting payment via EFT.
In June 2009, shortly after Sasafrasnet became Mr. Joseph‘s franchisor, an EFT from Mr. Joseph‘s account for a fuel delivery was returned for non-sufficient funds (“NSF“). Three more EFTs were returned NSF over the next three weeks. Mr. Joseph then made his payments as they came due until March 2010, when three more EFTs from Mr. Joseph‘s account were returned NSF. Thus, in the first year of Sasafrasnet‘s relationship with its new franchisee, Mr. Joseph had repeated payment problems in two different months.10 Mr. Joseph acknowledges that he had “cross-collateralized a few of [his] businesses” and that, when certain “deals” pertaining to another business “went south,” the bank began “sweeping” his account, leaving it without sufficient funds to satisfy the EFTs that Sasafrasnet would be initiating.11 He admits that this situation was the result of “a mistake [he made] that repeated itself over the course of a year.”12 He testified, however, that he “would always give them the money the next day or the day after.”13
In March 2010, after Mr. Joseph‘s second round of NSFs, Sasafrasnet began to require that Mr. Joseph pay for his fuel before it was delivered. Nevertheless, as the district court found, this method of payment was not ideal for Sasafrasnet.14 Therefore, in a letter dated May 7, 2010, Sasafrasnet indicated that it would allow Mr. Joseph to resume paying for deliveries by EFT within three days of delivery. The letter stated that Mr. Joseph would be required to pay a $2,500 penalty for any subsequent NSF. It also indicated that Mr. Joseph would be returned to pre-pay status if he incurred two more NSFs. Mr. Joseph signed the letter, indicating that he “agree[d]” to its terms.15
On July 19, the parties agreed that Mr. Joseph could rectify these NSFs by paying the total amount due in person by noon the next day. Mr. Joseph was late for this deadline, arriving to pay at 2:00 p.m. Mr. Joseph then paid the amounts due, plus the $5,000 penalty for the two NSFs that were, in Sasafrasnet‘s view, his fault.
By this time, Mr. Joseph had incurred ten NSFs. All but one of the NSFs were for amounts over $20,000, and three were for amounts over $45,000.19 On July 30, 2010, Sasafrasnet gave Mr. Joseph ninety days’ notice that it was terminating his franchise. Sasafrasnet later determined that this notification did not comply with the notice requirements in the PMPA, and it withdrew the notification. In November 2010, Sasafrasnet reissued the ninety-day notice of termination. It listed the July 2010 NSFs and Mr. Joseph‘s failing scores on a mystery shopper inspection20 as its bases for termination.
B. District Court Proceedings
Shortly before the termination was to become effective, Mr. Joseph filed this action under the PMPA in the
Thereafter, the district court entered an “Injunction Pending Appeal” on the condition that Mr. Joseph post a $100,000 appeal bond. By a stipulation of the parties, the district court further ordered Mr. Joseph to deliver $30,000 in additional fuel security to Sasafrasnet, bringing the total deposit to $40,000. At oral argument, Mr. Joseph‘s counsel informed us that Mr. Joseph continues to operate the station.
II
DISCUSSION
A. Standard of Review
In actions under the PMPA, the [district] court shall grant a preliminary 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 exist 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 the franchisor by the issuance of such preliminary injunctive relief will be less than the hardship which would be imposed upon such franchisee if such preliminary injunctive relief were not granted.
“The franchisee‘s burden of proof for receiving a preliminary injunction under the PMPA is not a heavy one.” Moody v. Amoco Oil Co., 734 F.2d 1200, 1216 (7th Cir.1984). “The franchisee need not ... establish that it would be irreparably harmed in the absence of an injunction.” Beachler v. Amoco Oil Co., 112 F.3d 902, 905 (7th Cir.1997). Furthermore, unlike
Our review of a district court‘s decision to grant or to deny preliminary relief under the PMPA is “narrow“; we “will not reverse a district court‘s grant or denial of a preliminary injunction absent a clear abuse of discretion by the district court.” Id. at 1217. We review questions of law de novo and questions of fact for clear error. Burlington N. & Santa Fe Ry. Co. v. Bhd. of Locomotive Eng‘rs, 367 F.3d 675, 678 (7th Cir.2004).
B. Grounds for Termination
In its November 2010 letter, Sasafrasnet informed Mr. Joseph that it was terminating his franchise because he had “failed to pay Sasafrasnet all sums due under the [DLSA] in a timely manner,” noting particularly the July 2010 NSFs.22 Specifically, Sasafrasnet indicated that it was resting its decision to terminate Mr. Joseph‘s franchise, in part, upon
The occurrence of an event which is relevant to the franchise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reasonable, if such event occurs during the period the franchise is in effect and the franchisor first acquired actual or constructive knowledge of such occurrence[ within a prescribed period.]
As used in subsection (b)(2)(C) of this section, the term “an event which is relevant to the franchise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reasonable” includes events such as—
...
(8) failure by the franchisee to pay to the franchisor in a timely manner when due all sums to which the franchisor is legally entitled;
(A) any failure which is only technical or unimportant to the franchise relationship;
(B) any failure for a cause beyond the reasonable control of the franchisee; or
(C) any failure based on a provision of the franchise which is illegal or unenforceable under the law of any State (or subdivision thereof).
Sasafrasnet contends that the occurrence of an event listed in
We have not determined definitively whether a termination based on an event listed in
C. Application
Having determined that the events listed in
A franchisor may invoke properly
At the preliminary injunction stage, Mr. Joseph had the burden of “show[ing that] ... there exist[ed] sufficiently serious questions going to the merits to make such questions a fair ground for litigation.”
Our inquiry requires that we focus on two terms in this statutory provision—
1.
Mr. Joseph did not address explicitly the statutory definition of “failure” during the proceedings before the district court.26 Rather, Mr. Joseph took as the focus of his argument that, even if Sasafrasnet could invoke properly
As we also have noted, however, our sister circuits have determined further that there is “[a] specific, limited reasonableness requirement ... incorporated into the statute through section 2801(13).” Hinkleman, 962 F.2d at 377. Although Mr. Joseph never cited
We believe it best that the district court revisit this question and address explicitly the elements of the term “failure” set forth in
The second point that the district court should consider is whether the July 2010 NSFs that were within Mr. Joseph‘s reasonable control were “only technical or unimportant to the franchise relationship.”
2.
Mr. Joseph also submits that “[t]he question of what constitutes payment ‘in a timely manner[ ]’ ... is ‘intended to permit evaluation of nonpayment or late payments in view of prevailing commercial or industry trade practices.‘” Clinkscales, 831 F.2d at 1573 n. 19 (quoting S.Rep. No. 95-731, at 38 (1978), reprinted in 1978 U.S.C.C.A.N. 873, 896). We have previously endorsed this standard, see Brach v. Amoco Oil Co., 677 F.2d 1213, 1221 (7th Cir.1982), and we continue to believe that it reflects accurately the statutory intent of
Here, Mr. Joseph had the burden of demonstrating, in support of his motion for a preliminary injunction, that Sasafrasnet would not be able to establish at trial that the payments were untimely according to the practice of the industry. He simply did not carry that burden. Assuming, arguendo, that the district court determines that it was reasonable for Sasafrasnet to regard Mr. Joseph‘s late payments as “failure[s],” there is no evidence of record that would have permitted the district court to make a finding that the payments were timely. The record before us, at this stage of the proceedings, makes it abundantly clear that, for a franchisee with a payment record of this caliber, the July 2010 NSFs constituted untimely payments within the meaning of
For its part, Sasafrasnet has submitted evidence showing that it had no institutional experience with a franchisee with such a record.34 After Mr. Joseph experienced his second bout of repeated NSFs within the first year of the parties’ business relationship, Sasafrasnet placed him on pre-pay status. This letter put him on notice that Sasafrasnet was not in the practice of tolerating late payments. Sasafrasnet reiterated this point in May 2010, when it took Mr. Joseph off pre-pay status on the condition that he pay a stiff monetary penalty for any future late payment. Therefore, to the extent that the experience of the franchisor may be considered as some evidence of industry practice,35 the record simply shows that this situation was extraordinary and did not comport with Sasafrasnet‘s regular practice.
For the same reason, Mr. Joseph cannot claim that he lacked “notice that timely payment would be required in the future,” Sun Ref. & Mktg. Co. v. Rago, 741 F.2d 670, 674 (3d Cir.1984), because “he had been on notice that his past practices of late payments would not be condoned,” Pendleton, 889 F.2d at 1512. Again, to the extent that the franchisor‘s experience may be said to be reflective of industry experience, there is no evidence that Mr. Joseph was given inadequate notice of Sasafrasnet‘s expectations.
Mr. Joseph also makes the argument that his payments cannot be considered untimely because “the parties entered into a written agreement regarding how future late payments would be dealt with” and that he “was compliant with the terms of [that] agreement.” Appellant‘s Br. 16. Although Mr. Joseph asserts that this agreement amended the DLSA,36 his more
This characterization conflicts with the terms of the DLSA, which is, of course, the contract that governs Mr. Joseph‘s franchise. The DLSA provides:
No failure to act on an incident of breach, and no course of dealing[,] will be construed as the waiver of the right to act.... Any failure of [Sasafrasnet] to enforce rights or seek remedies upon any default of [Mr. Joseph] with respect to any of the obligations of [Mr. Joseph] hereunder, will not prejudice or affect the rights or remedies of [Sasafrasnet] in the event of any subsequent default of [Mr. Joseph].
R.1-5 at 3 (DLSA 15). It further provides:
More than one incident, within a 12 month period, of failure by [Mr. Joseph] to make payment according to [the] EFT policy causing a draft to be dishonored for nonsufficient or uncollected funds ... entitles [Sasafrasnet] to suspend deliveries, impose other payment or prepay terms, and/or terminate or nonrenew [the DLSA], in addition to exercising any other rights [Sasafrasnet] may have under [the DLSA] at law or in equity or under [Sasafrasnet]‘s then current Credit Policy.
R.1-3 at 2 (DLSA 4); see also id. (“[Sasafrasnet] has the right to impose a service and late payment charge for each check and/or EFT that is dishonored for nonsufficient or uncollected funds, whether or not subsequently paid by [Mr. Joseph].“).
This language makes clear that Sasafrasnet‘s decision to impose penalties for future NSFs was not an implicit waiver of its right to terminate Mr. Joseph‘s franchise in the event of such NSFs. The DLSA put Mr. Joseph on notice that Sasafrasnet could “impose ... payment or prepay terms[ ] and/or terminate or nonrenew th[e] DLSA” if Mr. Joseph incurred two NSFs within one year. Id. (emphasis added).37 It further provided that Sasafrasnet‘s decision to seek certain remedies would not prejudice Sasafrasnet‘s right to seek other appropriate remedies. Therefore, Mr. Joseph was on notice that Sasafrasnet would not tolerate late payments and that Sasafrasnet retained the discretion to determine whether it would seek to terminate the franchise under the rights afforded to it by the DLSA and PMPA if and when Mr. Joseph experienced future NSFs. See Clinkscales, 831 F.2d at 1573 n. 19 (explaining that the PMPA allows termination based on the repeat occurrence of an event even if the franchisor did not seek termination based on the previous occurrences); Rago, 741 F.2d at 674 (same).
Conclusion
For the foregoing reasons, we reverse the judgment of the district court and
REVERSED and REMANDED
KENNETH F. RIPPLE
UNITED STATES CIRCUIT JUDGE