The U.S. Supreme Court has ruled in favor of Shell Oil Co. and Motiva Enterprises LLC in a Massachusetts case filed by independent service station owners, Bloomberg reported.
The station owners filed the lawsuit saying Shell and Motiva used rent increases to try to end their franchise arrangements so the companies could usurp operation of the stations.
The Supreme Court unanimously decided a group of station owners can’t press claims under the U.S. Petroleum Marketing Practices Act, a 1978 law that gave independent station owners more power in their dealings with oil companies.
Writing for the court, Justice Samuel Alito noted, “the PMPA was enacted to address the narrow areas of franchise terminations and non-renewals, not to govern every aspect of the petroleum franchise industry.”
The case concerned eight of more than 50 Massachusetts station owners who sued. The station owners won a $3.3 million jury verdict when the case was initially presented. A federal appeals court upheld part of the award, and both sides appealed to the Supreme Court. The Supreme Court ruling affected only the federal claims being pressed by the station owners and not other allegations under Massachusetts state law.
The station owners sued under provisions in the federal law barring improper lease terminations. Shell and Motiva contended the station owners can’t invoke those provisions because they accepted new lease terms and continued to operate their franchises.
A federal appeals court in Boston said the station owners could press claims for “constructive termination” even though they continued to operate their franchises. The Supreme Court, however, reached the opposite conclusion on the owners’ allegations of “constructive non-renewal,” saying they forfeited those claims by signing new leases.